Asian stocks buoyed by earnings, China lags on disinflation woes

This report was created by [OXShare]

On Thursday, several Asian stocks experienced a minor increase, as they started to recover from previous losses. This recovery was attributed to positive earnings reports. However, gains remained limited due to concerns regarding China, which were heightened by the release of weak inflation data.

After data revealed that China experienced disinflation in October, Chinese stocks performed poorly compared to other stocks in the region and remained stagnant or declined.

The current pattern indicates further economic vulnerabilities in Asia’s biggest economy and suggests that the region will face additional challenges as China strives to strengthen its growth.

Japan and Australian stocks experience a significant surge in their market performance due to impressive earnings.

On Thursday, the wider Asian markets continued to see some increases. In Australia, the ASX 200 experienced a 0.5% rise, primarily due to the positive performance of bank stocks following the impressive earnings report of National Australia Bank Ltd (ASX:NAB). The company’s stock increased by 1.3%, reflecting a growth in its yearly profit.

The Nikkei 225 in Japan had the highest performance compared to other similar indexes, increasing by 1% due to positive earnings announcements from Sony Corp and Nintendo Co Ltd this week. Later today, SoftBank Group Corp. and Nissan Motor Co will also release their quarterly earnings reports, and both stocks have already seen gains in anticipation of the results.

The KOSPI index in South Korea increased by 0.4%, and the futures for India’s Nifty 50 index suggested a positive start.

However, the majority of Asian stocks continued to experience declines this week due to a series of cautious statements made by officials from the U.S. Federal Reserve. These statements have created uncertainty regarding whether the bank has finished increasing interest rates.

A number of members of the Federal Reserve expressed the view that persistent inflation and the strong performance of the economy will lead the central bank to maintain higher interest rates for a longer period of time. This could also prompt a potential increase in rates in December. These statements were made prior to a speech given by Chair Jerome Powell on Thursday.

During his speech on Wednesday, Powell did not provide much information regarding monetary policy.

However, the Asian markets are not looking favorable due to the expectation of continued high interest rates in the United States. Additionally, the poor economic forecast for China suggests that there will be even more challenges for the region.

Chinese stocks experience a decline as the released data indicates a decrease in inflation.

China’s stock market experienced a slight decline with Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both falling by approximately 0.1%. At the same time, Hong Kong’s Hang Seng index also experienced a decrease of 0.5%.

According to government data released on Thursday, inflation rates for both consumers and producers decreased in October, leading to the country experiencing disinflation for the second time in 2021.

Additionally, the inflation information was released shortly after disappointing trade statistics for October. Recent reports had already indicated continued decline in Chinese business activity throughout the month.

Investors became increasingly worried about a potential economic decline in China due to the disappointing October figures. As a result, they anticipated that Beijing would implement additional measures to stimulate growth.

However, the decline in Chinese stocks was offset by the positive performance of property stocks, which increased following news that Beijing may implement additional measures to support the sector.