Asia report: Most markets fall after US inflation report

14th Nov 2024 10:04

(Sharecast News) - Asia-Pacific markets mostly declined on Thursday following a US inflation report overnight that reinforced expectations of a Federal Reserve rate cut in December.

October's consumer price index (CPI) matched expectations, with a year-over-year inflation rate of 2.6%, while core CPI, excluding food and energy, registered a 3.3% increase.

"While longer-term U.S. government yields and the dollar increased on Thursday as investors assessed the monetary policy and inflation outlook in the United States, weak Chinese markets drove down broader Asian shares," said Patrick Munnelly at TickMill.

"Donald Trump's return to the White House and the optimism that his administration will be good for cryptocurrencies helped Bitcoin stabilise above $90,000 after it had surpassed that mark in the previous session.

"Although Trump's return to office muddled the outlook for monetary policy in 2025 and beyond, traders in the broader market responded to a US inflation report that matched forecasts by raising bets on a Federal Reserve rate drop next month."

Munnelly said it was expected that Trump's tax cuts and tariff increases would increase inflation, and limit the Fed's ability to lower interest rates.

"Additionally, Edison Research predicted Wednesday that when the president-elect assumes office in January, the Republican Party will control both chambers of Congress, allowing him to essentially implement his program without interference.

"Longer-dated US bond yields increased Thursday in Asia trade, reflecting this uncertainty.

"The benchmark 10-year Treasury yield reached its highest level since 1 July, at 4.483%."

Most markets in the red after US inflation reading

In Japan, the Nikkei 225 slipped 0.48% to 38,535.70, while the Topix fell 0.27% to 2,701.22.

Kansai Electric Power led declines with an 18.46% drop after announcing plans to raise JPY 504.9bn to support business expansion over the next few years, focusing on decarbonisation and renewable energy.

China's markets were among the region's weakest, with the Shanghai Composite and Shenzhen Component falling 1.73% and 2.83%, respectively, to 3,379.84 and 11,037.78.

Key losses included Shanghai Shenda, Mubang High Tech, and China Satellite Communications, each sliding around 10%.

Hong Kong's Hang Seng Index dropped 1.96% to 19,435.81, as Chinese property stocks like Longfor Properties declined after Beijing's recent tax cuts for homebuyers failed to ease sector concerns.

In South Korea, the Kospi 100 edged up 0.12% to 2,407.44, with strong performances from Hanwha Ocean and Hyundai Heavy Industries.

South Korean markets opened later than usual due to the College Scholastic Ability Test (CSAT), a significant event that affects national scheduling.

Australian markets bucked the regional trend, with the S&P/ASX 200 rising 0.37% to 8,224.00.

Gains in the healthcare and technology sectors were led by Mesoblast, up 16.72%.

New Zealand's S&P/NZX 50 also saw a modest 0.15% increase to 12,692.94, led higher by Synlait Milk.

In currency markets, the dollar was last up 0.37% on the yen, trading at JPY 156.04, as it gained 0.43% against the Aussie to AUD 1.5486 and advanced 0.43% against the Kiwi, changing hands at NZD 1.7079.

Oil prices edged higher, with Brent crude futures last up 0.5% on ICE at $72.64 per barrel, and the NYMEX quote for West Texas Intermediate ahead 0.53% at $$68.79.

Aussie unemployment rate meets market expectations

In economic news, Australia's unemployment rate held steady at 4.1% in October, aligning with economists' expectations, according to fresh data.

Employment increased by 15,900 jobs over the month, though that gain fell short of the anticipated 25,000.

The participation rate, which tracks the percentage of working-age Australians who are either employed or actively looking for work, came in at 67.1%, just below the forecast 67.2%.

Reporting by Josh White for Sharecast.com.