Asian Stocks Up, China Releases Inflation Data

© Reuters.

By Gina Lee

AiVIF.com – Asia Pacific stocks were up on Wednesday morning, as investors digested the latest Chinese inflation data. Their U.S. equivalents also rose after Federal Reserve Chair Jerome Powell reiterated that the central bank would tackle inflation.

China’s Shanghai Composite was up 0.22% by 9:01 PM ET (2:01 AM GMT) and the Shenzhen Component gained 0.77%. Data released earlier in the day showed that the consumer price index (CPI) grew 0% month-on-month and 1.5% year-on-year in December. The producer price index (PPI) grew 10.3% year-on-year.

U.S.-listed Chinese stocks were up, with the Nasdaq Golden Dragon China Index jumping as much as 4.7%. But Goldman Sachs Group Inc. cut its forecast for China’s growth in 2022 as the country deals with its latest COVID-19 outbreaks involving the omicron variant.

Hong Kong’s Hang Seng Index rose 1.56%.

Japan’s Nikkei 225 jumped 1.72% and South Korea’s KOSPI rose 1.24%.

In Australia, the ASX 200 gained 0.50%.

In his Senate Banking Committee hearing for a second term as Fed chairman, Powell said that the central bank would act if needed to contain high inflation, adding that the Fed will probably start asset tapering in 2022.

It has been a rocky start to 2022 as investors brace for interest rate hikes to curb soaring inflation.

“The market is grappling with a broad-based rotation and the potential for a hastened pace of rate hikes, which is leading to volatility,” UBS Private Wealth Management managing director Greg Marcus said in a note.

“Regardless of the volatility seen in markets so far this year, corporate fundamentals are strong, and we are expecting double-digit earnings growth this year, which should bode well for stock prices in 2022.”

However, strategists from Goldman Sachs (NYSE:GS) to UBS Global Wealth Management seemed unruffled, remaining bullish that equities can weather higher interest rates and rising bond yields.

On the data front, the U.S. releases its CPI and the Fed Beige Book later in the day, followed by the PPI on Thursday.

Meanwhile, the Senate Banking Committee hearing for Fed vice-chair nominee Lael Brainard will take place on Thursday. Richmond Fed President Thomas Barkin, Philadelphia Fed President Patrick Harker, and Chicago Fed President Charles Evans will also speak on Thursday.