Asia report: Stocks fall after US CPI, China holds interest rate

Asia-Pacific equity markets were mostly lower at the close on Wednesday, after a key inflation print in the United States came in hotter than expected overnight.

In Japan, the Nikkei 225 was down 0.37% at 27,501.86, as the yen weakened 0.13% against the dollar to last trade at JPY 133.33.

Fashion firm Fast Retailing was up 0.44%, while automation specialist Fanuc was down 0.3% and technology conglomerate SoftBank Group was 1.01% weaker.

The broader Topix index was off 0.27% by the end of trading in Tokyo, settling at 1,987.74.

On the mainland, the Shanghai Composite was off 0.39% at 3,280.49, and the technology-heavy Shenzhen Component was 0.25% weaker at 12,064.38.

China’s central bank stood pat on a key interest rate earlier in the day, holding the medium-term lending facility at 2.79%.

The People’s Bank of China said the move would “keep the liquidity of the banking system adequate at a reasonable level” in its statement.

“The Central Economic Work Conference in December set out the top policy priority for 2023 as domestic demand expansion,” noted Duncan Wrigley at Pantheon Macroeconomics.

“The question is what specific policies can achieve this goal - local governments are seeking to stimulate spending by issuing consumption vouchers, but the funding is small scale.

“Policy documents indicate the likelihood of national policies to promote electric vehicle sales, home appliance sales and modern services.”

But Wrigley said one of the key issues to promote a consumption recovery was how to boost confidence in the growth outlook and income.

“We think that policymakers will likely decide on symbolic rate cuts to boost sentiment around the same time as the March Government Work Report, whose key message will no doubt be domestic demand expansion.”

South Korea’s Kospi slid 1.53% to 2,427.90, while the Hang Seng Index in Hong Kong was 1.43% lower at 20,812.86.

The jobless rate on the southern half of the Korean peninsula fell slightly in fresh data, with unemployment down to 2.9% in January from 3.3% in December.

Korea’s economy added 411,000 new jobs year-on-year for the month, which was a 1.5% improvement on January 2022.

Seoul’s blue-chip technology stocks were in the red, with Samsung Electronics down 1.58% and SK Hynix off 1.82%.

The moves for Samsung Electronics came after it revealed plans to borrow KRW 20trn from Samsung Display - its sibling company in the Samsung chaebol.

It said the proceeds, which would carry an interest rate of 4.6%, would be used for operational purposes.

Taiwan was also in focus, with semiconductor giant TSMC sliding 3.67% after it emerged Warren Buffett’s Berkshire Hathaway had significantly sold down its holding in the firm.

According to CNBC, Berkshire bought 60 million TSMC shares in the third quarter, which saw the stock price jump 10%.

In the latest regulatory filings, however, Buffett’s investment vehicle now held about 86% less of the company than it did previously.

“Warren Buffett’s investment company cut 86% of its stake in TSMC in the previous quarter in a quick reversal that is unusual for the investor,” said analysts at Saxo.

“As the rivalry in chips is heating up between the US and China, Berkshire Hathaway is likely finding it uncomfortable to hold exposure to physical manufacturing in a conflict area.”

Oil prices were in the red at the end of the Asian day, with Brent crude futures last down 0.58% on ICE at $85.08 per barrel, and the NYMEX quote for West Texas Intermediate losing 0.77% to $78.45.

In Australia, the S&P/ASX 200 ended the day down 1.06% at 7,352.20, with the financials subindex leading the losses after Reserve Bank governor Philip Lowe described inflation as still “too high”.

Among the big four banks, ANZ Group was down 3.77%, Commonwealth Bank lost 5.72%, National Australia Bank slid 4.11%, and Westpac Banking Corp closed 4.32% weaker.

Mining play Fortescue Metals, meanwhile, was down 0.81% after it reported a fall in profit and a lower dividend for the second half of the 2022 calendar year.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 eked out gains of 0.07% to 12,083.12, with the retirement property development sector in focus in Wellington.

Ryman Healthcare surprised the market by announcing an NZD 920m capital raise, while competitor Summerset Holdings closed down 2.6% after confirming one of its developments was evacuated twice in the last 24 hours amid the destructive Cyclone Gabrielle.

The down under dollars were both weaker against the greenback, with the Aussie last off 1.29% at AUD 1.4499, and the Kiwi 0.89% weaker at NZD 1.5920.

Reporting by Josh White for Sharecast.com.