Most Asian stocks rose slightly on Tuesday, with Japanese markets trading positive on a dovish outlook from the Bank of Japan, while caution over China and a slew of upcoming indicators kept traders on edge.
Markets were largely focused on upcoming U.S. consumer price index (CPI) inflation data later in the day, as well as a Federal Reserve interest rate decision on Wednesday, which is widely expected to set the tone for U.S. monetary policy in 2024.
Japan’s Nikkei 225 index was among the better performers for the day, extending strong gains from Monday after media reports said the BOJ said it saw little need to rush into winding down its ultra-dovish policy.
The reports indicated that Japanese monetary policy will remain largely loose for the time being, making the country an outlier in an otherwise high interest rate environment. This notion was a key driver of a Japanese stock market rally this year.
Japanese producer inflation also rose slightly in November, data showed on Tuesday, although the reading did little to spur bets on a BOJ pivot.
Chinese stocks muted after volatile session; Govt buying eyed
China’s bluechip Shanghai Shenzhen CSI 300 hovered near five-year lows, while the Shanghai Composite moved in a tight range. Hong Kong’s Hang Seng index added 0.8% on a rebound in property stocks, amid hopes of more government support for the beleaguered sector.
Local stocks had fallen sharply on Monday after data over the weekend showed that China slipped further into disinflation in November. But they had recouped a bulk of the day’s losses amid reports that Chinese state funds were snapping up local exchange-traded funds.
The reports come as Beijing struggles to shore up economic growth and inspire investor confidence in the country, following a string of dismal economic readings for November. Chinese stocks are also among the worst performers in Asia this year.
A senior Bank of America (NYSE: BAC) banker warned that China’s property market was likely to remain a key pain point for the economy in the coming year.
Concerns over China kept broader Asian markets trading in a tight range. Australia’s ASX 200 rose 0.5% as data showed a mild improvement in consumer sentiment in early-December.
South Korea’s KOSPI added 0.4%, while Philippine shares lost 0.2% after data showed an outsized drop in exports in November.
Indian stocks steady near record highs, eyes on CPI data
Futures for India’s Nifty 50 index pointed to a muted open, after the index retreated from record highs on Monday.
Focus is largely on Indian CPI inflation data due later in the day, which comes just days after the Reserve Bank warned of a potential spike in inflation.
Higher inflation bodes poorly for the Indian economy, which is among the fastest-growing major global economies this year. Optimism over this growth was a key factor behind the Nifty’s record-high run over the past two weeks.
