Asia report: Shares down despite lower-than-expected China CPI

Asia-Pacific shares were mostly lower on Friday on the back of a weaker Wall Street as China inflation came in lower than expected.

The Shanghai Composite fell 0.3% to 3,260 points and the Shenzhen Component shed 0.59% to 11,976. Hong Kong’s Hang Seng index was the region's major faller, down 2% to 21,190.

In Japan the Nikkei 225 rose 0.31% to close at 27,670.98, while the Topix gained 0.1% to end the day at 1,986.96.

The Japanese government is looking to present nominations for the next Bank of Japan’s governor on February 14, Kyodo reported, citing government sources, while a Nikkei report said Kazuo Ueda would get the job.

That pushed the yen higher against both the euro and US. Ueda is a former member of the central bank’s policy board and would replace Haruhiko Kuroda, whose term started in March 2013 and will end on April 8. He has overseen the BOJ’s policy of ultra-low interest rates while other major central banks have been hiking to tackle inflation.

In South Korea, the Kospi fell 0.48% to 2,469.73.

China’s consumer prices rose 2.1% in January compared to a year ago, marking the fastest pace in three months, according to official data and lower than estimates of a 2.2% rise.

On a monthly basis, prices rose by a higher-than-expected 0.8% in January as consumer activity picked up with China’s reopening after more than two years of a zero-Covid policy.

In Australia, the S&P/ASX 200 closed 0.76% at 7,433.7 as investors mulled a statement from the Reserve Ban on monetary policy which indicating further hikes ahead. Earlier this week, the central bank raised its benchmark interest rates by 25 basis points to 3.25%.

The RBA on Friday said inflation remains high but “looks to have peaked". However, the easing in global goods price pressures had not filtered through to domestic retail prices, with inflation for consumer durables, services and rents picking up in the December quarter.

“The board expects that further increases in interest rates will be needed to ensure that the current period of high inflation is only temporary,” the RBA said.

Its forecast is for CPI to decline to 4.75% over 2023 and to around 3% by mid-2025.

Reporting by Frank Prenesti for Sharecast.com