HONG KONG (AFP) – Asian markets were largely stronger Friday after US inflation data renewed speculation of an interest rate hike, advancing despite disappointing Japanese figures that challenged Tokyo’s war on falling prices.
Official data showed Japan’s inflation slowed for a sixth straight month in January – dampened by weak consumer spending and falling energy prices – its lowest level since May 2013.
Tokyo stocks edged up to a fresh 15-year high, despite profit-taking largely erasing earlier gains that were driven by the yen’s fall.
The Nikkei 225 index at the Tokyo Stock Exchange ticked up 0.06 per cent, or 12.15 points, to end at 18,797.94, while the Topix index of all first-section issues advanced 0.14 per cent, or 2.17 points, to 1,523.85.
Seoul slipped 0.37 per cent in cautious trading after a recent rally with the benchmark KOSPI closing down 7.28 points at 1,985.80. Sydney climbed 0.34 per cent, closing up 20.3 points to 5,928.8.
Hong Kong was up 0.21 per cent in the afternoon, while Shanghai added 0.48 per cent.
The dollar eased after rallying on the US inflation figures which pointed to rising price pressures in some areas, which could ease the way for the Fed to hike interest rates.
In Tokyo, the dollar weakened to 119.29 yen from 119.42 yen in New York, although it was still higher than 118.97 yen seen in Tokyo earlier Thursday.
The euro rose to $1.1210, from $1.1198, but it slipped to 133.70 yen from 133.72 yen in US trade.
While falling crude oil prices continued to dampen overall inflation in the US, rising pressures were revealed in a number of areas, including shelter and personal care.
Markets have been rife with speculation over when exactly this year the US central bank will start raising interest rates, with Fed Chair Janet Yellen pointing this week to there being no hurry to raise interest rates from near-zero.
“Given that inflation surprises have been negative around the world, anything above consensus is a sign for optimism and a sign for higher rates in the US,” Deutsche Bank strategist Daniel Brehon told Bloomberg News.
Despite Tokyo’s high-profile offensive on deflation, Japan’s core consumer inflation, excluding volatile fresh food prices, came in at 2.2 per cent year-on-year, down from 2.5 per cent in December, with the rise in overall consumer prices standing at 2.4 per cent.
The disappointing official price data challenges BoJ governor Haruhiko Kuroda’s claims that inflation is on an uptrend, and boost the chances that the BoJ will unleash more stimulus to counter the downturn, which would tend to weaken the yen.
Kuroda, however, told a news conference Friday: “As the effects of the decline in crude oil prices on a year-on-year basis dissipate, the two per cent inflation is likely to be achieved.”
Meanwhile, Japanese factory production in January rose a faster-than-expected 4.0 per cent on-month, growing for the second straight month.
Oil bounced back in Asia on bargain-hunting after tumbling in the previous session over a further surge in US crude reserves, adding to the global supply glut.
US benchmark West Texas Intermediate (WTI) for April delivery rose 84 cents to $49.01 a barrel while Brent crude for April rose 91 cents to $60.96 in afternoon trade.
WTI sank $2.82 in New York while Brent closed $1.58 lower in London.