Asia’s Stock Markets Tread Water Ahead of U.S. Inflation Figures

Asian markets treaded cautiously on Tuesday, with most stocks maintaining a narrow range as investors awaited key U.S. inflation data, while Chinese markets faced pressure as another major property developer defaulted on bond payments.

Reflecting a lack of decisive movements on Wall Street, regional markets exhibited subdued activity as traders exercised caution ahead of pivotal inflation readings scheduled for Tuesday and Wednesday.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes both experienced a decline of approximately 0.3%, retracting from their earlier highs in 2024. The downturn was primarily attributed to a slump in property market stocks.

Agile Group Holdings Ltd (HK:3383) bore the brunt of this downturn, with its Hong Kong shares plummeting nearly 15% following its default on an interest rate payment on Monday. Additionally, the company reported a sharp decrease in sales during the first four months of 2024, reflecting the ongoing challenges in the property market.

Despite optimism surrounding Beijing’s announcement of plans for a substantial bond issuance aimed at bolstering fiscal stimulus, concerns about a broader property market downturn overshadowed market sentiment.

Losses in property stocks also contributed to the subdued performance of Hong Kong’s Hang Seng index. However, gains in heavyweight technology stocks such as Baidu Inc (NASDAQ:BIDU) (HK:9888), Alibaba Group (HK:9988) (NYSE:BABA), and Tencent Holdings Ltd (HK:0700) provided some support, particularly ahead of their quarterly earnings releases.

Elsewhere in Asia, broader market movements remained muted, with the focus firmly on the impending U.S. inflation data, which is expected to influence interest rate decisions.

Japan’s Nikkei 225 index managed a modest 0.1% gain, buoyed by a more than 2% surge in technology giant SoftBank Group Corp. (TYO:9984) following its return to profitability in the fourth quarter. The company also reported a significant narrowing of losses for fiscal 2024 compared to the previous year.

Meanwhile, data released on Tuesday indicated that Japanese producer price index inflation met expectations for April.

In contrast, Australia’s ASX 200 declined by 0.3%, while South Korea’s KOSPI remained largely unchanged.

Indian markets, as indicated by futures for the Nifty 50 index, were poised for a flat opening amid lingering cautiousness among investors ahead of the 2024 general elections.

However, the primary focal point across Asian markets remained the impending U.S. inflation data. The release of the producer price index (PPI) inflation figures on Tuesday, followed by the more closely-watched consumer price index (CPI) reading on Wednesday, was anticipated to have significant implications for market sentiment.

Any indications of persistent inflationary pressures were expected to further dampen expectations of Federal Reserve interest rate cuts, potentially unsettling markets. Moreover, with inflation projected to remain well above the Fed’s 2% annual target rate, the central bank was likely to face limited pressure to initiate immediate rate adjustments.