Asia report: Markets mixed as consumer inflation slows in Korea

(Sharecast News) - Asia-Pacific markets mostly declined on Tuesday as investors reacted to South Korea's August inflation rate, which dropped to the lowest annual level since March 2021. Wall Street was closed on Monday for the Labor Day holiday, giving the Asian session less of an overnight catalyst, as investors looked to the US non-farm payrolls report due later in the week.

"North American investors return from the long weekend holiday to a less-than-welcoming market, stepping into a seasonally gloomy tunnel with the year's most crucial jobs report looming large," said SPI Asset Management managing partner Stephen Innes.

"This report is set to draft the Fed's policy script for 2024, and everyone's hoping for a steady state affair with the numbers landing squarely in the Goldilocks zone."

Innes said the pressure around the report was "even more intense" this time, thanks to a larger-than-expected negative revision to payroll data for the 12 months through March.

"This revision has only upped the ante, making it all the more critical for this jobs report to come in strong.

"In China, the story remains as predictable as ever: the economy desperately needs a jolt of big-ticket fiscal stimulus aimed directly at households to kickstart spending.

"The lack of demand is glaring, and simply tinkering with the supply side of credit won't cut it."

Markets mixed across the region

In Japan, the Nikkei 225 edged down slightly by 0.04% to 38,686.31, while the Topix index gained 0.64% to close at 2,733.27.

Notable decliners on Tokyo's benchmark included Fujikura, which fell 3.74%, Lasertec, down 3.44%, and Sumco Corporation, which lost 2.76%.

China saw varied results, with the Shanghai Composite declining by 0.29% to 2,802.98, while the Shenzhen Component rose 1.17% to 8,268.05.

Major losers in Shanghai included SDIC Zhonglu Fruit Juice, which dropped 5.43%, Shanghai Huitong Energy, down 5.4%, and China National Nuclear Power, which fell 5.18%.

Hong Kong's Hang Seng Index fell by 0.23% to 17,651.49, weighed down by significant losses in China Merchants Bank, down 3.11%, China Resources Power, which dropped 2.33%, and China Shenhua Energy, which decreased by 2.26%.

In South Korea, the Kospi index declined by 0.61% to 2,664.63 following the inflation news.

LG Innotek was among the leading losses, plunging 7.86%, followed by LG Display, down 5.6%, and NCsoft Corporation, which fell 3.8%.

Australia's S&P/ASX 200 index dipped by 0.08% to 8,103.20, with sharp declines in resource stocks.

Mineral Resources and Liontown Resources both tumbled 8.45%, while Stanmore Resources fell 6.21%.

In New Zealand, the S&P/NZX 50 dropped 0.17% to 12,534.51, driven by losses in Synlait Milk, down 4.88%, Restaurant Brands New Zealand, which fell 4.79%, and Fletcher Building, down 3.7%.

In currency markets, the dollar was last down 0.81% on the yen to trade at JPY 145.73.

The greenback was stronger on both its Australian and New Zealand counterparts, rising 0.62% against the former to AUD 1.4818, and advancing 0.57% on the latter, changing hands at NZD 1.6136.

Oil prices were mixed, with Brent crude futures last down 0.66% on ICE at $76.22 per barrel, while the NYMEX quote for West Texas Intermediate rose 0.11% to $73.63.

South Korea inflation slows to 42-month low

On the economic front, South Korea's inflation rate in August slowed to its lowest annual level since March 2021, with the consumer price index (CPI) rising 2% year-on-year.

That marked a decrease from July's 2.6% increase, and aligned with economists' forecasts, according to a Reuters poll.

On a monthly basis, the CPI edged up by 0.4%, slightly above the 0.3% increase that analysts had anticipated.

Reporting by Josh White for Sharecast.com.