Asia report: Stocks mixed as Japan inflation reaches 41-year high

Stock markets in the Asia-Pacific region closed in a mixed state on Friday, February 24, as investors reacted to a record high inflation rate in Japan.

The Nikkei 225 in Japan rose by 1.29% to close at 27,453.48, while the Topix increased by 0.67% to close at 1,988.40.

Advantest led the gains, rising by 8.22%, followed by Tokyo Electron, which was up by 7.13%, and Okuma Corporation, which gained 5.66%.

Meanwhile, the Shanghai Composite in China closed down by 0.62% at 3,267.16, while the Shenzhen Component fell by 0.81% to close at 11,787.45.

Hangzhou XZB Tech Co and Anhui Jianghuai Auto were the biggest losers, falling by 4.99% and 4.61%, respectively.

In Hong Kong, the Hang Seng Index lost 1.68% to close at 20,010.04, with NetEase leading the losses by falling 11.21%.

Baidu and Geely Automotive also declined, by 6.01% and 5.43%, respectively.

The Kospi in South Korea closed down by 0.63% at 2,423.61.

Hanwha Systems and Chonbang Co were the biggest losers, falling by 8.38% and 8.02%, respectively.

The S&P/ASX 200 in Australia closed up by 0.3% at 7,307.00, with Block leading the gains by rising 5.86%.

REA Group also increased by 2.13%.

In New Zealand, the S&P/NZX 50 closed up by 0.14% at 11,905.75, with Serko and Vista being the biggest gainers, rising by 6.38% and 5.3%, respectively.

“Overnight in Asia, Japan’s annual inflation rate rose to 4.3% in January versus 4% in December, the highest reading since 1981 driven by imported commodity prices and a weaker yen,” said Victoria Scholar, head of investment at Interactive Investor.

“The incoming governor of the Bank of Japan Kazuo Ueda suggested the central bank would stick to its loose monetary policy saying, ‘the BoJ’s current policy is a necessary, appropriate means to achieve 2% inflation.’”

In currency markets, the yen weakened 0.47% against the dollar to last trade at JPY 135.33, while the Aussie was off 0.59% on the greenback at AUD 1.4775, and the Kiwi retreated 0.45% to change hands at NZD 1.6129.

On the commodities front, Brent crude futures rose 0.45% on ICE to $82.58 per barrel, while the NYMEX quote for West Texas Intermediate was 0.38% higher at $75.68.

In economic news, Japan's national consumer price index (CPI) rose 4.2% year-on-year in January, in line with expectations and reaching a new 41-year high.

Core CPI, excluding fresh food and energy prices, was up 3.2% according to the government data.

“The overall picture remains cost-push inflation, driven by the lagged effect of the weak yen and high imported commodity and energy prices feeding into other production costs,” said Duncan Wrigley at Pantheon Macroeconomics.

“Government subsidies for energy are likely to bring down headline inflation from February onwards, though only at a gradual pace.

“The base effect should also help slow inflation, as the low point of headline inflation was 0.5% year-on-year in January 2022.”

Elsewhere, Bank of Japan governor nominee Kazuo Ueda expressed his support for current monetary policy in remarks to parliament, with Reuters quoting him as saying it was “appropriate” despite side effects, and that more time was needed to reach its inflation target.

Finally, in Singapore, manufacturing output in January fell 2.7% on the year, which was lower than expected, although the Economic Development Board noted that biomedical manufacturing and transport engineering expanded by a respective 23.2% and 4.7%.

Reporting by Josh White for Sharecast.com.