Asian markets wary after China inflation data

Wednesday, 16 February 2011 00:01 -     - {{hitsCtrl.values.hits}}

HONG KONG, (AFP) - Asian markets had a cautious day Tuesday as traders digested Chinese data showing that January inflation came in at 4.9 percent, while oil rose as unrest flared in several Middle Eastern states.

Chinese annualised inflation was lower than expected, but concerns remained that it was still high, especially given that Beijing had changed its methodology for producing the figure, reducing the weight of food prices.

Analysts in Hong Kong, where the Hang Seng fell 0.96 percent, or 221.28 points, to 22,899.78, said further measures to cool the mainland economy were likely following three interest rate hikes in four months.

“The general feeling in the market is that without the change in weighting, the January consumer price index would definitely have been more than five percent,” Alvin Cheng, associate director of Prudential Brokerage, told Dow Jones Newswires.

The Shanghai composite index ended flat, gaining just 0.11 points to 2,899.24.

Tokyo’s Nikkei index ended up 0.20 percent, or 21.13 points, at 10,746.67, helped by a weaker yen, which tends to boost the value of Japanese exporters. Sydney closed 0.10 percent, or 4.8 points, lower at 4,931.0.

Tokyo dealers welcomed the Bank of Japan’s upgrading of the nation’s economy for the first time in nine months. The BoJ held interest rates between zero and 0.1 percent to try and combat stubborn inflation.

The bank’s “economic outlook, combined with solid corporate earnings, are positive support for market sentiment,” said Yumi Nishimura, deputy general manager at Daiwa Securities Capital Markets.

In Singapore, shares in the city’s exchange finished 0.60 percent higher at Sg$8.30 after an announcement that it and the Australian bourse had revamped their merger proposal, hoping to overcome objections to the deal.

The city’s Straits Times Index fell 0.76 percent, or 23.76 points, to 3,080.66 overall however.

On currency markets, the euro traded at $1.3479 in early European trade, down from $1.3486 in New York late Monday and was at 112.70 yen from 112.38 yen.

The dollar fetched 83.58 yen compared with 83.29 yen late in New York.

Oil prices climbed in Asian trade, bolstered by continued unrest in the Middle East and North Africa and robust Chinese demand, analysts said.

New York’s main contract, light sweet crude for March delivery, was up 33 cents at $85.14 per barrel in the afternoon.

Brent North Sea crude for April advanced 34 cents to $103.42.

Iran saw security forces clash with demonstrators in Tehran, firing tear gas and paintballs, while there has also been violence in the Gulf state of Bahrain and in Yemen.

Investors are concerned that the troubles around the oil-rich region could lead to supply problems, resulting in higher prices.

Gold closed at $1,364.00-$1,365.00 an ounce in Hong Kong, up from Monday’s close of $1,360.00-$1,361.00.

In other markets:

  • Seoul fell 0.20 percent, or 4.07 points, to 2,010.52 on foreign selling, but the market made up most early losses after China’s lower-than-expected inflation data.
  • Taipei rose 0.42 percent, or 36.46 points, to 8,721.93.

Leading IC design house MediaTek was 1.01 percent higher at Tw$351.0, while Nanya Technology rose 2.26 percent to 18.1.

  • Manila fell 0.16 percent, or 5.95 points, to 3,790.78.

Philippine Long Distance Telephone Co. fell 2.2 percent to 2,308 pesos and SM Investments Corp. rose 1.54 percent to 460 pesos, while Metropolitan Bank and Trust Co. gained 2.32 percent to 59.50 pesos.

  • Wellington closed up 0.20 percent, or 6.62 points, at 3,390.09.

Fletcher Building ended down 0.5 percent at NZ$8.21, while gaming operator Sky City rose 0.9 percent to NZ$3.33.

  • Bangkok rose 0.15 percent, or 1.42 points, to 968.49.

Coal miner Banpu rose 0.8 percent, or 6.00 baht, to 724.00, while Siam Cement fell 1.3 percent, or 4.00 baht, to 304.00.