Asia stocks rose on Wednesday in the middle of the U.S. inflation. Investors are hoping and waiting for the Consumer price index (CPI) to be released later in the day, that the reading will show that inflation is coming down. The weak reading has induced a profit in many Japanese markets.
Inflation has been a major concern of investors in recent months. Because a strong CPI could put pressure on central banks to increase interest rates to the extreme while weaker reading gives relief to markets.
Hong Kong stocks were the significant market of the day. Investors stay biased toward the Chinese technology giants by saying that the country was easing its harsh rhetoric against the giant internet companies.
China gains hope on the raise of Hong Kong stocks
The Hang Seng index of Hong Kong’s raised to 1.2% and it lead the gains obtained by Asia in the heavyweight technology stocks. Shares of Alibaba Group Holding Ltd, Baidu Inc, and Tencent Holdings Ltd – the BAT trio- surged between 1.6% and 3.5%.
The bumper fine on Tencent and Alibaba’s Ant Group increased expectations that China would now wind down the three-year regulatory crusade against domestic tech firms. Investors also expect the worse China’s economic condition would put pressure on the government to involve more in the investment of private technology companies.
The rest of the Chinese stocks listed in Hong Kong also raised. China for this sudden surge stated that Beijing is likely getting back with measures and supporting the slower recovery of the economy,
Amid all the surges, some China’s indexes like Shanghai Shenzhen CSI 300 and Shanghai Composite traded flat. Investors are also wary about making a direct play into Hong Kong markets.
On the whole, the Asian market saw a sudden surge while marketers were cautious, on the edge to get the CPI reading. KOSPI of South Korea surged 0.2% while ASX 200 of Australia rose 0.4%. Also, the positivity over the Indian economy and heavy technology reflects well on their indexes: Nifty 50 and BSE Sensex 30 recorded high in the week.
Japanese stock seeing its down with weak economic data
Indexes of Japan were the worst performers in Asia where Nikkei 225 spiked down 0.7% while the broader TOPIX was down by 0.6%. These indexes were reduced from a 33-year high spot and were trading at one-month lows.
Japan’s disappointing economic statistics led to another wave of profit-taking in local markets as weaker-than-expected equipment orders, easing factory inflation, and a rising jobless rate raised concerns about how resilient the Japanese economy was.
Also, increase in the value of Yen put pressure on Japanese stocks with an export focus.
So, what can we expect in the future?
On the whole, the market is likely to remain volatile when the CPI data is released. If the data is in line with the expectation, it calms the investors and allows them to continue the rally
However, investors are not looking only at CPI data, they will be focusing on the number of other reports on the economy that includes industrial production, retail sales, and housing starts. These reports will offer more clues about the condition of the US economy and check whether inflation is coming under control or not.
Hence, whatever the CPI may be denoted in the release, investors should be prepared to resist the volatility of the near-term market. If the economic data comes on the positive side, it could offer some extra support and enable them to continue the rally.