News Column

Asian Stocks Mixed After Chinese Inflation Data

May 9, 2014

CANBERA (Alliance News) - Asian stocks turned in a mixed performance on Friday after official figures showed China's consumer inflation fell to an 18-month low in April, increasing the risk of deflation in the world's second-largest economy if a growth slowdown deepens. Also, investors remained focused on developments in Ukraine ahead of a controversial referendum in eastern Ukraine this weekend. Pro-Russian activists in eastern Ukraine have decided to go ahead with their referendum seeking autonomy on Sunday, despite a call from Russian President Vladimir Putin to postpone it.

Japanese shares closed higher in choppy trading, with concerns about the Ukraine crisis capping overall gains. The benchmark Nikkei average rose 0.3% to 14,200, while the broader Topix Index gained half a percent. Ebara Corp soared 7.5% and Mitsubishi Heavy Industries jumped 6.8% on better-than-expected earnings.

Toyota Motor Corp advanced 0.6%. The company posted a record USD17.9 billion annual net profit, but cautioned that earnings growth would decelerate this fiscal year. Canon Inc. shares rose nearly 2%. The world's largest camera maker said it would buy back up to 1.5% of its outstanding shares for around USD492 million to improve capital efficiency. Online retailer Rakuten Inc. plunged 5.5% after its quarterly operating profit missed forecasts.

Chinese shares drifted lower, dragged down property stocks amid signs of cooling in the country's property market. The benchmark Shanghai Composite Index slipped 0.2% to 2,011. Great Wall Motor Co. shares slumped 10% after the automaker announced it would defer deliveries of a key new premium SUV model due to a quality issue. Hong Kong'sHang Seng Index edged up 0.1% to 21,863.

China's consumer price inflation rose an annual 1.8% in April, the National Bureau of Statistics said, coming in below estimates for a 2% gain and the 2.4% rise in March. Producer prices fell 2% in the month, compared with a 2.3% decrease in March and forecasts for a 1.8% decline.

Australian shares ended well off their day's lows after the Reserve Bank of Australia's quarterly statement on monetary policy revealed the central bank will keep interest rates low for some time yet. The benchmark S&P/ASX 200 Index eased 0.3% to finish at 5,461.

The RBA raised its GDP forecast for 2014 to 3% from the 2.75% estimated earlier, and reiterated its commitment to hold interest rates unchanged for the foreseeable future to support the economy. Forecasts for inflation remained little changed from the previous report.

Miners weakened as iron ore prices continued to slide on fears of a meltdown in Chinese property prices amid rigid lending. Big miners BHP Billiton and Rio Tinto fell about 0.8% each and smaller rival Fortescue Metals Group slipped 0.1%. In the banking sector, ANZ fell 3.2% on going ex-dividend, while Westpac, Commonwealth and NAB rose between 0.1% and 0.7%.

News Corp. shares gained 3% despite the media group posting an 85% fall in quarterly profit amid a 5% decline in revenue, as a result of currency fluctuations and weakness in the print advertising market. JB Hi-Fi rallied 2.8% after announcing a share buyback worth approximately USD27.2 million.

Seoul shares moved in a tight range before finishing modestly higher, as institutional buying offset foreign fund selling for a seventh straight day. The benchmark Kospi average closed up 0.3% at 1,957.Skin-care product manufacturer AmorePacific Corp soared 11% after it posted a 25% increase in quarterly profit.

On the economic front, the Bank of Korea left its key rate unchanged at 2.50% for the 12th straight month, as expected, citing signs of recovery at home and abroad. "Inflation will gradually rise, although it will remain low for the time being due largely to the stability of agricultural product prices," the bank said.

New Zealand shares fell modestly as investors waited for cues from earnings in the coming weeks. The benchmark NZX-50 Index dropped 0.2% to 5,153, with 21 of its components retreating. Sky Network Television, Chorus, Telecom and Fisher & Paykel Healthcare fell more than a percent each, while A2 Milk Co. paced the declines on the exchange, falling 3.9% to 75 cents. Utility TrustPower rose 0.4% despite the company reporting a 7% decline in full-year profit.

In economic releases, retail spending using electronic cards increased by a seasonally adjusted 0.3% in April, Statistics New Zealand said, missing forecasts for an increase of 0.6% following the flat reading in March.

Elsewhere, India's Sensex was up nearly 3% on optimism Narendra Modi-led Bharatiya Janata Party (BJP) would form the government at the Centre after the mammoth national elections set to conclude on Monday. The results will be announced on May 16.

The benchmark indexes in Indonesia, Malaysia and Singapore were up between 0.1% and 0.4%, while the Taiwan Weighted average dropped half a percent.

On Wall Street, stocks ended mixed overnight as earnings season began to wind down. While beaten-down momentum stocks gained ground, energy and utility shares came under selling pressure. In economic news, new claims for unemployment benefits fell more than expected last week, a sign the labor market continues to gain traction. The Dow rose 0.2%, while the tech-heavy Nasdaq dropped 0.4% and the S&P 500 edged down 0.1%.

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Source: Alliance News

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