Cooling Recession Fears Boost Asian Stocks, China Inflation Data Beats Expectations
Asian stocks experienced an uptick on Friday, as concerns about an impending U.S. recession began to ease. Additionally, slightly positive inflation data from China provided a boost to market sentiment.
Despite this, regional markets were still on track for weekly losses, having faced steep declines earlier in the week.
Uplift from Wall Street
Asian markets were buoyed by a positive handover from Wall Street, where stronger-than-expected jobless claims data helped calm fears over the U.S. labor market. This optimism led to a slight rise in U.S. stock index futures during Asian trading hours.
Chinese Markets Lag, Despite Positive CPI Data
China’s major indexes, the Shanghai Shenzhen CSI 300 and Shanghai Composite, both gained 0.3% on Friday, though they underperformed compared to other Asian markets. For the week, both indexes were down around 0.8%, marking a third consecutive week of losses.
However, China’s inflation data offered some encouraging signs. The Consumer Price Index (CPI) showed a better-than-expected increase, while the Producer Price Index (PPI) indicated a slower-than-expected decline. These readings suggest that the People’s Bank of China’s recent interest rate cuts are starting to have an impact, although it remains uncertain whether this will be enough to reverse the country’s deflationary trends.
Investor sentiment towards Chinese markets has deteriorated in recent weeks, driven by a series of disappointing economic indicators. As a result, China’s benchmark indexes remained near six-month lows.
Japanese Stocks Surge, Recover Weekly Losses
Japan’s Nikkei 225 and TOPIX indexes surged by 2% and 1.5%, respectively, on Friday. Although both indexes were still set to close the week with a 1.5% loss, they managed to recover a significant portion of the losses incurred earlier in the week.
The rebound in Japanese markets was supported by Bank of Japan officials’ efforts to downplay the central bank’s unexpectedly hawkish stance from the previous week. Additionally, bargain hunting in major tech stocks and positive earnings reports from companies like Tokyo Electron, which saw its stock rise 1.7% due to strong demand from the artificial intelligence sector, contributed to the recovery.
Broader Gains in Asian Markets
Tech-heavy markets across Asia also saw gains, with South Korea’s KOSPI and Hong Kong’s Hang Seng indexes rising between 1.5% and 2%. These gains were in line with a rebound in U.S. markets.
Australia’s ASX 200 increased by 1.4%, although it was still down 1.9% for the week. Like other markets, it managed to recoup a significant portion of its weekly losses.
Futures for India’s Nifty 50 index indicated a slightly positive opening, following a decline on Thursday. The dip was triggered by the Reserve Bank of India’s unexpectedly hawkish tone and a slight downgrade in its growth outlook for the current quarter.
