BANGKOK– Asian shares headed lower on Friday, although Tokyo’s benchmark continued its New Year’s rally, trading well above 35,000 and at its highest level since 1990.
U.S. futures fell slightly, while oil prices rose more than $1 a barrel.
China reported that its exports and imports rose slightly in December, a sign that the economic recovery remains uneven, although global demand may rebound as central banks halt their latest round of inflation-fighting rate hikes.
Consumer prices fell 0.3% in December, the third straight month of declines and a sign of continued weakness in demand. The producer price index – which measures the prices that factories charge to wholesalers – fell 2.7% in the fifteenth straight month of decline.
Some of that growth was fueled by a nearly 64% increase in auto exports in 2023, to 4.1 million passenger cars, the China Association of Automobile Manufacturers said Thursday.
On Thursday, a U.S. inflation report forced some investors to downgrade their forecasts for when the Federal Reserve would implement long-awaited interest rate cuts, dampening buying enthusiasm.
But Tokyo’s Nikkei 225 rose 1.5% to 35,577.11, capping a week of strong gains that have taken the index to levels not seen since 1990, when Japan’s asset bubbles began to deflate at the beginning of an era of faltering growth.
The yen’s weakness against the U.S. dollar has Japanese exporters such as industrial robot manufacturer Fanuc Corp. provided a boost, with shares rising 2.1% on Friday.
Taiwan’s Taiex fell 0.2% to 17,512.83 on the eve of presidential and parliamentary elections that will test the self-governing island’s relations with both Beijing and Washington.
Hong Kong’s Hang Seng lost early gains, falling 0.5% to 16,212.11, while the Shanghai Composite index fell 0.2% to 2,881.98.
South Korea’s Kospi fell 0.1% to 2,537.17, while Australia’s S&The P/ASX 200 also fell 0.1% lower to 7,501.40.
In Taiwan, shares rose on the eve of the presidential elections. Markets in India and Thailand were also higher.
On Thursday, Wall Street reeled after the inflation update raised questions about when the Federal Reserve might begin the rate cuts that investors are craving.
The S&P500 fell 0.1% to 4,780.24. The Dow Jones Industrial Average rose less than 0.1% to 37,711.02, and the Nasdaq composite rose less than 0.1% to 14,970.19.
Citigroup lost 1.8% after listing the costs it will charge against its fourth-quarter results, related to everything from Argentina’s troubled economy to a previously disclosed special assessment by the Federal Deposit Insurance Corp.
Hertz Global Holdings fell 4.3% after it said it expects a decline in an underlying measure of profit in the fourth quarter and that it is selling about 20,000 electric vehicles to reduce its EV fleet by a third.
Stock prices soared to record highs on expectations that a cooling of inflation would convince the Federal Reserve to cut rates sharply in 2024, boosting prices for investments. Thursday morning’s inflation report showed that US consumers paid a total of 3.4% higher prices in December than a year earlier. That’s an acceleration from inflation of 3.1% in November and slightly warmer than economists expected.
But the trends beneath the surface were perhaps a little more encouraging. After excluding food and fuel prices, which can change significantly from month to month, the price increase from November to December was close to economists’ expectations.
The inflation figures caused government bond yields to make an erratic run on the bond market. After sinking from Wednesday evening to Thursday, they jumped immediately after the report’s release, but then started yo-yoing. By late afternoon they were lower, allowing the stock indexes to recover much of their earlier losses.
The yield on the 10-year government bond remained stable at 3.98% early Friday. It is down from more than 5% in October.
On Friday, a barrel of U.S. crude oil rose $1.50 to $73.52, a jump of 2.1%. On Thursday, the price rose 65 cents to $72.02. Brent crude, the international standard, rose $1.60 to $79.01 a barrel.
In currency transactions, the US dollar was trading at 145.24 Japanese yen, down from 145.28. The euro fell from $1.0971 to $1.0966.