Asian Shares Showed Mixed Performance; China Deflation Pressures Returns After Lunar New Year, Japan Is Showing Improved Inflation

In today’s trading session, Asian stocks indicated mixed performance following a decline in US stocks. Concerns arose due to what appeared as a minor hiccup to fight inflation indicating a more concerning pattern. 

In China, Investors turned their heads to consumer and producer price data while the March data showed a weaker demand environment. 

As per the recent data, producer prices declined by 2.8% year-on-year, continuing the trend from February when they dropped by 2.7%. Economists had predicted a 2.8% decrease in producer prices. 

In a low-demand environment, producers lower their prices to compete for new business. Declining trends in producer prices alleviate pressure on consumer prices.

Consumer price trends indicate a slowdown in consumer spending, with the annual inflation rate decreasing from 0.7% to 0.1% in March. As a result, economists had anticipated an inflation rate of 0.4%. While consumer prices saw a 1% decrease month-on-month, reversing the 1% increase observed in February. As a result, economists had forecast a 0.5% decline. 

Meanwhile, scope ratings revised Japan’ss sovereign outlook from negative to stable on March 22, attributing it to increased inflation and its beneficial impact on debt sustainability. 

Japan’s recent inflation seems increasingly resilient. Both headline and core inflation reached 2.8% year-on-year as of February, while Tokyo inflation remained elevated last month. As per the annual headline inflation at the national level has maintained a level above 2% since April 2022. 

Tokyo’s Nikkei 225 went down by 0.4% to 39,432.61 and the Hang Seng index was also down by 0.6% at 17,037.80. The Shanghai Composite Index, on the other hand, gained 0.4% to 3,038.68 and the S&P/ASX 200 went down by 0.4% to 7,816.