Asia Markets Lower as China Inflation Data Misses Expectations

On Thursday morning asia markets traded lower after Chinese inflation data came in below expectations. Mainland Chinese markets, watched by investors in relation to Beijing’s ongoing trade war with Washington, were lower in early trade. The Shanghai composite, Shenzhen composite and Shenzhen component all slipped more than 0.1 percent.

The moves came after official inflation data for December, released at the same time as the market open, came in below expectations.

China’s December consumer inflation (CPI) — a gauge of prices for goods and services — rose 1.9 percent on year. That was lower than economists’ expectations of a 2.1 percent growth, according to a Reuters’ poll. Producer inflation rose 0.9 percent on-year in December, which was lower than the 1.6 percent economists were expecting.

Economic data from the world’s second-largest economy has been closely watched by investors for signs of damage inflicted by the trade war between Beijing and Washington.

Elsewhere in Asia, Japan’s Nikkei 225 slipped 1.49 percent while the Topix index declined 1.19 percent. South Korea’s Kospi was lower by 0.32 percent as shares of steelmaker Posco fell more than 1 percent.

In Australia, the benchmark ASX 200 shed 0.19 percent, with the sectors mixed. The heavily-weighted financial subindex slipped 0.23 percent as shares of Australia’s so-called Big Four banks mostly declined. Westpac was fractionally lower, Commonwealth Bank of Australia declined almost 0.4 percent while National Australia Bank slipped 0.2 percent. Australia and New Zealand Banking Group, on the other hand, gained 0.32 percent.

U.S. and China conclude three days of trade talks
The latest round of trade negotiations in Beijing concluded on Wednesday after an unscheduled third day of talks. Officials from Washington said in a statement that they will report back to the White House for further guidance on the talks.

In a statement, the office of the U.S. Trade Representative said that officials discussed “needed structural changes in China” on matters such as forced technology transfers, intellectual property protection and cyber theft. Talks also focused on “China’s pledge to purchase a substantial amount of agricultural, energy, manufactured goods, and other products and services from the United States,” the statement said.

The Chinese Commerce Ministry also issued its own statement on Thursday morning, saying that the just-concluded round of trade talks with the U.S. were extensive and established a foundation for the resolution of each others’ concerns. Both parties agreed to maintain close contact, the ministry said.

“Initial signs suggest that there is modest momentum building towards a narrow agreement in coming months, but that US trade hawks are fighting an intense rear-guard action to limit the scope of that agreement and keep the pressure up on Beijing,” analysts at political risk consultancy Eurasia Group wrote in a note.

“If a deal is reached, it will almost certainly remain fragile and there will still be a long road ahead of the removal of US tariffs already imposed,” they said.

Analysts at Singapore’s DBS Group Research also said in a morning note that while the three-day meeting was a first step towards easing tensions on both sides, there are challenges ahead.