Asian markets navigated a narrow range on Monday, mirroring the subdued sentiment on Wall Street as stronger-than-expected inflation data heightened concerns about prolonged elevated U.S. interest rates.
The decline in Wall Street indexes on Friday followed the release of January’s U.S. producer price index inflation data, surpassing expectations. This came on the heels of robust consumer price index inflation figures, prompting traders to scale back expectations of early interest rate cuts by the Federal Reserve in 2024.
In Asian trade, S&P 500, Dow Jones, and Nasdaq 100 futures posted marginal gains, with attention shifting to key earnings reports from NVIDIA Corporation (NASDAQ:NVDA) and Walmart Inc (NYSE:WMT) scheduled later in the week. U.S. markets remained closed on Monday for a national holiday.
China Reopens Higher Amid Lingering Recovery Uncertainties
Chinese markets resumed trading after a week-long holiday, opening higher but with modest gains. The Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose by 0.5% and 1%, respectively, recovering further from multi-year lows witnessed earlier in 2024.
Contrarily, Hong Kong’s Hang Seng index, which experienced robust gains on Friday in anticipation of the Chinese reopening, slid 1.1% and emerged as the weakest performer in Asia on Monday.
Recent official data showcased a sharp rise in consumer spending during the Lunar New Year holiday week, surpassing pre-COVID levels in travel demand. However, questions lingered about whether this surge signaled a fleeting occurrence or the initiation of a robust recovery. Economic indicators before the holiday indicated ongoing pressure on the Chinese economy due to sluggish business activity and a growing deflationary trend.
This week, market focus turns to the People’s Bank of China’s benchmark loan prime rate, widely anticipated to remain unchanged at record lows.
Mixed Movements in Other Asian Markets
Other Asian markets exhibited mixed movements, with Japan’s Nikkei 225 experiencing a 0.3% decline amid profit-taking but staying near record highs.
Nintendo Co Ltd (TYO:7974), a gaming industry giant, faced a 6.2% dip following reports of a delay in the release of its Switch console successor to 2025 from the initially expected 2024.
Australia’s ASX 200 displayed a flat performance, while South Korea’s KOSPI edged up by 0.8%, driven primarily by robust performances in heavyweight chipmaking stocks. SK Hynix Inc (KS:000660), a memory chip maker, surged nearly 4%, briefly reaching a record high on optimistic expectations related to the AI development boom in the coming months.
Most Southeast Asian bourses reported steady conditions, while futures for India’s Nifty 50 index indicated a subdued opening, aligning with the overall muted movements across broader Asia.