A woman passes by an electronic board displaying the Nikkei index and exchange rate between the Japanese Yen and U.S. dollar outside a brokerage in Tokyo, Japan on January 4, 2023. REUTERS/Kim Kyung-Hoon/File photo
SYDNEY – Asian share markets showed weakness today, while the U.S. dollar gained strength, as investors awaited inflation data from China and the United States to gain insight into the global economy’s health. MSCI’s broadest index of Asia-Pacific shares, excluding Japan, rose by 0.9 percent, following the mild gains in U.S. stocks during the previous session. However, the index has declined by 2.8 percent this month.
The yield on the benchmark 10-year Treasury notes increased to 4.0885 percent, compared to the U.S. close of 4.078 percent on Monday. The two-year yield, which reflects traders’ expectations of higher Federal Reserve fund rates, reached 4.7682 percent, compared to the U.S. close of 4.758 percent.
While Australian shares rose by 0.39 percent and Japan’s Nikkei stock index increased by 0.72 percent, Hong Kong’s Hang Seng Index fell by 1.73 percent, and China’s blue-chip CSI300 Index experienced a 0.54 percent loss in early trading.
This mixed start in Asia followed a stronger performance in U.S. markets. The Dow Jones Industrial Average rose by 1.16 percent, the S&P 500 gained 0.90 percent, and the Nasdaq Composite added 0.61 percent.
Investors worldwide are eagerly anticipating inflation readings from China on Wednesday and the United States on Thursday. They expect these readings to reveal significant differences in price movement between the two largest economies in the world. According to a Reuters poll of economists, U.S. inflation is likely to have slightly accelerated to an annual rate of 3.3 percent in July, while the core rate is expected to remain unchanged at 4.8 percent. ANZ predicts that China’s July consumer price index will show a year-on-year decline of 0.4 percent.
“The Fed is cautious of the risks of elevated inflation, as the demand for labor remains excessive, and most policymakers believe that the policy rate needs to be kept restrictive,” wrote ANZ economists on Tuesday. “Weak inflation in China will likely exert a disinflationary force on global goods markets in the future.”
Later today, Chinese trade data for July is expected to reveal a 12.5 percent drop in exports compared to the previous year, according to a median forecast of 28 economists in a Reuters poll. Investors are still considering the possibility of economic stimulus from China’s central government to revive the stagnant economy. While some minor measures to support the property markets have been implemented in the past two weeks, there has been no outline for a broad stimulus plan.
“While waiting for signs of deflation, markets are torn between economic pessimism and hopes of a massive stimulus that could reignite China’s growth,” said Mizuho economists. “However, we remain unconvinced that Beijing’s stimulus efforts will successfully boost the struggling economy.”
The dollar remained steady against the yen at 142.47, still a significant distance from its peak of 145.07 reached on June 30. The European single currency decreased by 0.1 percent to $1.1002, while the dollar index, which measures the greenback against a basket of major trading partner currencies, increased to 102.07.
U.S. crude oil rose by 0.51 percent to reach $82.36 per barrel, and Brent crude increased to $85.73 per barrel. Gold saw a slight decrease, with the spot price at $1935.55 per ounce.
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