Asian Shares End On Muted Note Ahead Of U.S. Inflation Report

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Asian stocks surrendered early gains to end on a muted note on Thursday as investors awaited U.S. inflation data for December later in the day that might show price pressures eased from the previous month.

A higher-than-expected reading could force the Federal Reserve to keep raising interest rates at a sharp clip. The U.S. rate futures currently price in two 25-basis-point hikes in February and March.

Boston Federal Reserve bank leader Susan Collins remarked to the New York Times that she was in favor of raising interest rates to just above 5 percent this year.

Chinese shares fluctuated before ending on a flat note as a rally in heavyweight technology stocks ran out of steam and investors fretted about a surge in COVID-19 cases ahead of the weeklong Lunar New Year holidays starting on January 21.

Data released earlier today showed Chinese consumer price inflation increased slightly more than expected in December, while producer price inflation continued to fall, albeit at a slower pace, as the country relaxed most of its strict anti-COVID curbs.

Hong Kong’s Hang Seng Index rose 0.4 percent to 21,514.10, although losses by tech heavyweights Alibaba and Tencent limited the upside.

Japanese shares ended slightly higher as data showed the country logged a record-high current account surplus in November. The Nikkei 225 Index finished marginally higher at 26,449.82, while the broader Topix closed 0.4 percent higher at 1,908.18.

While a stronger yen weighed on exporters, banks rallied following a Yomiuri newspaper report that the Bank of Japan would review the side effects of massive stimulus at next week’s policy meeting.

Uniqlo parent Fast Retailing fell 2 percent, a day after announcing plans for wages hikes of as much as 40 percent.

Seoul stocks rose for a seventh straight day, with the Kospi finishing up 0.2 percent at 2,365.10 on hopes that cooling inflation could prod the U.S. Federal Reserve to go easy on its aggressive policy tightening.

Australian markets posted strong gains after data showed the trade surplus unexpectedly grew in November. The benchmark S&P/ASX 200 rallied 1.2 percent to 7,280.40, led by technology and financial stocks.

Energy stocks also surged as oil price held steady after a 3 percent gain on Wednesday. The broader All Ordinaries Index ended 1.1 percent higher at 7,489.90.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index edged up 0.2 percent to 11,664.88.

U.S. stocks rallied overnight, and Treasury yields dropped on hopes that cooling inflation could give the Federal Reserve room to dial back on its aggressive interest rate increases.

The tech-heavy Nasdaq Composite surged 1.8 percent to notch its first four-day winning streak since September, while the Dow rose 0.8 percent and the S&P 500 added 1.3 percent to reach their best closing levels in almost a month.

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