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Asian stocks mixed as yen gains on inflation data: markets wrap

Asian stocks mixed as yen gains on inflation data: markets wrap
Google headquarters in Mountain View, California, U.S., on Thursday, 27 January 2022.

Asian shares were mixed in early trade as markets await events due later this week for a better gauge of the global interest-rate outlook. The yen edged higher after stronger-than-expected Japanese inflation data.

Japanese shares rose, while equities in South Korea, Australia and China were mostly lower. US stock futures were little changed after the S&P 500 fell for the first time in four sessions on Monday.

Australia’s global miners BHP Group Ltd., Fortescue Ltd and Rio Tinto Ltd. all fell, weighing on the materials sector within the S&P/ASX 200. The decline reflects pressure on iron ore, which in turn may dent the outlook for China’s economy given the Asian nation is a major buyer of the commodity.

“A lot of investors have left and given up on the area completely which has sent even a lot of even the high quality companies to all-time low valuation levels,” Ann Miletti, a head of active equity at Allspring Global Investments, said on Bloomberg Television regarding Chinese equities. “Now is the time to really pay attention.”

The yen gained as consumer price index data showed headline price growth that exceeded consensus estimates, supporting the case for the Bank of Japan to move toward ending its negative interest rate policy. Despite a firmer yen, the currency remains at around 150 per dollar, a level it has largely held for the past two weeks.

The dollar edged lower versus most of its G10 peers while Treasuries were little changed.

In China, some financial institutions have cut back on swapping the dollar for yuan in a sign that foreign demand for the nation’s bonds may slow. At least three offshore institutions have reduced their swap trading in the past week, reflecting the need to increase risk controls, according to people familiar with the matter.

Declines for US stocks on Monday reflected a drop for Alphabet Inc. shares amid renewed fears that the Google owner’s missteps in artificial intelligence are putting its search business at risk. In late trading, Zoom Video Communications Inc. surged on a bullish earnings forecast and plans to buy back shares.

Wall Street is also keeping a close eye on how the market will manage to absorb heavy Treasury and corporate sales amid month-end positioning. US yields rose after Monday’s auctions of two-year and five-year government notes. Meanwhile, blue-chip companies in the US have sold a record $172-billion of bonds in February as they race to seize on investor demand amid a drop in borrowing costs. 

Nippon Steel Corp.’s planned $14.1-billion takeover of United States Steel Corp. remains under scrutiny, after the Japanese company signed a non-disclosure agreement with the United Steelworkers, allowing talks to progress even as the union publicly maintains its opposition to the deal.

In commodities, West Texas Intermediate was little changed after rising 1.4% Monday. Gold was little changed at around $2,032 per ounce.

Bitcoin eased after rising to the highest in more than two years in its previous session. Growing optimism that persistent investor demand through exchange-traded funds may drive the price of the largest cryptocurrency back to record levels.

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