Source: AFP
Chinese shares were higher after the Lunar New Year, but other Asian markets were mixed on Monday as a blistering US inflation report reignited concerns about the timing of Fed rate cuts.
Stocks fell in Tokyo and Hong Kong after a bigger-than-expected rise in U.S. wholesale prices on Friday dented hopes of an early rate cut by the Federal Reserve, sending Wall Street into the red.
But Shanghai and Shenzhen gained as traders returned from a week-long break. Markets in Seoul and Sydney also moved higher, while Singapore started the day flat.
Analysts highlighted data showing a 61 percent year-on-year increase in rail travel in China during the Lunar New Year holiday, with hundreds of millions of people commuting as extended families gather across the sprawling country.
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Healthy hotel bookings and e-commerce spending during the holiday season were also cited as reasons for the upbeat sentiment.
“Early data on holiday travel may show some green shoots for sluggish Chinese consumers,” National Australia Bank’s Taylor Nugent wrote in a note.
Stephen Innes, chief executive of SPI Asset Management, called the data a source of relief for Chinese “policymakers grappling with challenges such as slowing economic growth, risks of deflation, sluggish consumer demand and a collapse in the property sector”.
“However, while the rise in tourism provides a glimmer of hope, its long-term sustainability remains uncertain,” he warned.
Innes said investors in Chinese stocks were optimistic about the continuation of recent positive momentum in Asian markets despite last week’s US inflation shock.
Speaking in Washington on Friday, San Francisco Fed President Mary Daley said the U.S. central bank should “resist the temptation to act quickly” as it considers the time to start interest rate cuts.
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Nugent noted on Monday that Fed speakers “continued to preach patience,” adding that “the flow of data does not give them the green light to accelerate their tapering plans.”
Despite modest falls on Monday, Tokyo’s main Nikkei index rallied, with a positive trend seen in recent months now taking the index close to an all-time record set in 1989.
Optimism around strong Japanese earnings reports and a weak yen are boosting that performance, analysts said.
However, “some investors may consider profit-taking opportunities as the Nikkei nears new all-time highs as many wonder how long the weaker currency, which has been extremely supportive of exporter earnings, will last,” Innes warned.
Keys around 02:30 GMT
Tokyo – Nikkei 225: Down 0.3 percent at 38,365.59
Hong Kong – Hang Seng Index: Down 1.1 percent to 16,162.90
Shanghai – Composite: UP 0.8 percent to 2,887.83
Dollar/yen: DOWN to 149.97 yen from 150.16 yen
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GBP/USD: UP at $1.2615 from $1.2603
EUR/USD: DOWN at $1.0778 from $1.0781 on Friday
Euro/pound: DOWN to 85.44 pence from 85.51 pence
West Texas Intermediate: DOWN 0.5% to $82.87 a barrel
North Sea Brent crude: UP 0.6% to $81.28 a barrel
New York – Dow: DOWN 0.4 percent at 38,627.99 (close)
London – FTSE 100: UP 1.5 per cent at 7,711.71 (close)
Source: AFP