Chinese April inflation data come in higher than expected

SINGAPORE — Equities in the Asia-Pacific region were mixed on Wednesday as investors watched the market’s reaction to the release of higher-than-expected Chinese inflation data for April.

Mainland China equities led gains regionally, with the Shanghai Composite up 0.75% to close at 3,058.70, while the Shenzhen Component climbed 1.803% to 11,109.48. Hong Kong’s Hang Seng index rose 0.97% on the day to 19,824.57.

Investor sentiment towards Chinese equities may have been lifted by positive developments in the mainland’s Covid situation.

The Shanghai government announced Wednesday that eight districts have “contained the virus at the community level.” Meanwhile, the capital Beijing also recorded about half as many new daily cases as in the days before.

In inflation data released on Wednesday, China’s April producer price index rose 8% year-on-year, more than a 7.7% rise expected by analysts in a Reuters poll.

China will face many economic issues, including supply chain and inflation factors, but I’m a little less worried about the supply chain than maybe six months ago

Andrew Collier

Managing Director, Orient Capital Research

Consumer inflation also rose faster than expected. The CPI rose 2.1% year-on-year, beating analysts’ expectations in a Reuters poll of a 1.8% gain.

“China will face many economic issues, including supply chain and inflationary factors, but I’m a little less concerned about the supply chain than maybe six months ago,” Andrew Collier, managing director at Orient Capital Research, told CNBC’s “Street Signs Asia.” on Wednesday.

“Even in Shanghai, 70% of the [the] Manufacturing capacity is online. The most recent American Chamber of Commerce survey found that only 15% of their companies are not producing, although most of them, two-thirds, are experiencing slowdowns,” Collier said.

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In broader markets, Japan’s Nikkei 225 gained 0.18% to close at 26,213.64, while the Topix index fell 0.6% to 1,851.15.

South Korea’s Kospi slipped 0.17% to end the day at 2,592.27, while Australia’s S&P/ASX 200 ended 0.19% higher at 7,064.70.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan rose 0.4%.

The US CPI for April is also due out on Wednesday in the US and is expected to be slightly below the 8.5% seen in March, which could indicate inflation has peaked.

“The US CPI for April is the highlight of today, even the week,” wrote Joseph Capurso, head of international economics at the Commonwealth Bank of Australia, in a note.

“The consensus of US economists expects headline inflation to slow significantly from 1.2%/mo in March to just 0.2%/mo in April as retail gasoline prices have stabilised. However, core inflation is expected to edge up slightly to 0.4%/mo in April from 0.3%/mo in March,” Capurso said.

Oil prices rise more than 2%

Oil prices were higher in the afternoon of Asian session, with international benchmark Brent crude futures up 2.94% to $105.47 a barrel. US crude oil futures rose 2.95% to $102.70 a barrel.

The US Dollar Index, which tracks the dollar against a basket of its peers, came in at 103.648 after seeing a previous high of 103.961.

The Japanese yen traded at 129.90 per dollar, stronger from levels above 130.5 recorded against the greenback earlier this week. The Australian dollar changed hands at $0.6984 as it struggles to recover after falling from over $0.70 earlier in the week.

https://www.cnbc.com/2022/05/11/asia-markets-china-us-inflation-data-currencies-oil.html Chinese April inflation data come in higher than expected

Chrissy Callahan

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