SYDNEY- Asia’s stock markets were mixed on Wednesday with growth concerns dragging on China’s equities while shares rose in Japan and Australia after healthy US company earnings and retail data bolstered hopes the world’s biggest economy could avoid a recession.
Hotter-than-expected inflation lifted the New Zealand dollar briefly and stoked nerves ahead of Britain’s consumer price index (CPI) release. Tesla Goldman Sachs and Netflix report earnings on Wednesday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was dragged 0.6 percent lower by a 1.2 percent drop for the Hang Seng It has fallen daily since China’s growth data on Monday underscored the country’s faltering pandemic recovery.
Japan’s Nikkei rose 0.9 percent and touched a two-week peak. US and European futures were flat.
Headline US retail sales data came in below forecasts, but core sales which exclude food, fuel and building materials, rose a solid 0.6 percent in June and had economists lifting gross domestic product (GDP) forecasts.
“You can sense the probability of a soft landing,” said Tapas Strickland, head of market economics at National Australia Bank in Sydney. “Core inflation is coming down and there’s momentum from the consumer.”
The Atlanta Fed’s influential GDP Now tracker has the US economy growing an annualized 2.4 percent in the second quarter, slightly higher than its prediction of 2.3 percent a week earlier.
Big US bank shares rose sharply on strong results. Microsoft shares surged 4 percent, adding $100 billion in market value, after the company announced charges for artificial intelligence features in office software, a big first step in monetizing AI’s potential.
British inflation data is the next major challenge for market hopes that price rises are coming under control. A surprise to the downside, as happened in Canada on Tuesday and the US last week, could unleash a broad rally in risk assets.
New Zealand inflation came in at 6 percent year-on-year, slower than a reading of 6.7 percent a month earlier, but above expectations and drove up two-year swap rates as markets price in rates staying higher for longer.
The New Zealand dollar jumped to $0.6315 before slipping back to $0.6259 as the US dollar edged higher with a little help from a weaker euro.
European Central Bank (ECB) governing council member Klaas Knot said on Tuesday that hikes beyond next week’s meeting were “by no means a certainty,” knocking the euro from a 17-month high. It was last trading at $1.2220. – Reuters
