Asia Market News: Nikkei Slides Again on Rising Producer Prices

Asian Equity Markets Had a Mixed Start to the Tuesday Session

It was a mixed Tuesday morning session for the Asian equity markets. The Nikkei trended lower on rising bets on a Bank of Japan pivot from negative rates. However, the Hang Seng Index led the ASX 200 into positive territory.

Producer Prices from Japan Raise Bets on a March BoJ Pivot

Producer prices were up 0.6% year-on-year in February after rising by 0.2% in January. Economists forecast a 0.5% increase. The better-than-expected numbers raised bets on a March Bank of Japan pivot from negative rates. The figures for February signaled an improving demand environment. Producers raise prices in response to higher demand, passing prices onto consumers.

The Nikkei trended lower in response to the numbers, falling 1.41% to 38,275. Bank and tech stocks were among the worst performers.

Sumitomo Mitsui Financial Group Inc. (8316) and Mitsubishi UFJ Financial Group Inc. (8306) slid by 3.17% and 3.76%, respectively.

Softbank Group Corp. (9948) and Tokyo Electron Ltd. (8035) also extended losses from Monday, falling by 1.79% and 2.88%, respectively.

However, investor caution before the US CPI Report left the USD/JPY flat at 146.936.

Gold Prices Counter Falling Iron Ore Prices to Offer ASX 200 Support

On Tuesday, the ASX 200 was up 0.21% to 7,720. Overnight gold (XAU/USD) price trends contributed to early gains for the ASX 200. Gold stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. saw gains of 2.96% and 3.11%, respectively.

However, falling iron ore prices limited the upside for the ASX 200. Mining stocks had a mixed morning session. Fortescue Metals Group Ltd. (FMG) and BHP Group Ltd (BHP) declined by 0.32% and 0.58%, respectively. Rio Tinto Ltd. (RIO) bucked the early trends, gaining 0.67%.

Economic indicators from Australia failed to distract investors from the upcoming US CPI Report. The AUD/USD was up 0.05% to $0.66167 despite better-than-expected business confidence figures.

The NAB Business Confidence Index slipped from +1 to 0 in February. Economists forecast a drop to -1.

According to the February Survey,

• Forward orders declined, while trading and profitability improved midway through the first quarter.
• Employment conditions improved, though labor costs remained steady.
• Notably, final product prices and retail prices trended higher.

The upward trend in retail prices will likely draw the interest of the RBA, which left a rate hike on the table in February.

Hang Seng Index Unfazed by Upcoming US CPI Report

The Hang Seng Index enjoyed a positive start to the Tuesday session, gaining 0.98% to 16,750. Consumer price inflation numbers from China resonated, with the Hang Seng extending gains from the Monday session.

However, the Hang Seng eased back from an early high of 16,810. Investor caution before the US CPI Report may test buyer demand for Hang Seng-listed stocks later in the session.

Tech and real estate stocks contributed to the early gains. The Hang Seng TECH Index and Hang Seng Mainland Properties Index advanced by 1.56% and 2.36%, respectively. Alibaba Group Holdings Limited (9988) and Tencent Holdings Limited (0700) were up 1.37% and 2.30%, respectively.