Asia-Pacific Markets Show Mixed Performance as Japan's Inflation Inches Up in June

Asia-Pacific Markets Show Mixed Performance as Japan's Inflation Inches Up in June

Date: July 21, 2023

Asia-Pacific markets witnessed a mixed performance on Friday as investors analyzed Japan's consumer price index figures for June. The country's core inflation rate, which excludes fresh food costs, came in at 3.3%, meeting the expectations of economists polled by Reuters, according to official data.

Notably, Japan's core inflation rate of 3.3% for June is slightly higher than May's figure of 3.2% and also surpasses the Bank of Japan's target of 2%. The headline inflation rate in Japan also increased to 3.3% in June, rising from May's figure of 3.2%.

As a result of this data, the Nikkei 225 index experienced a slight decline of 0.24%. However, the Topix index managed to rise by 0.21% amid anticipation for the Bank of Japan's upcoming closely watched meeting for its rate decision.

In South Korea, the Kospi index fell marginally, and the Kosdaq retreated from its 16-month high, declining by 0.22%. This drop was triggered by producer prices falling for the first time since November 2020.

Meanwhile, Australia's S&P/ASX 200 slid 0.3% lower, reflecting the cautious sentiment in the market.

In contrast, Hong Kong's Hang Seng index exhibited strength, climbing 0.72%. Additionally, mainland Chinese stocks performed well, with both the Shanghai Composite and the Shenzhen Component showing marginal gains.

Moving to the United States, the Dow Jones Industrial Average registered a ninth consecutive day of gains, driven by better-than-expected earnings results from pharmaceutical company Johnson & Johnson. This marked the Dow's best daily winning streak since 2017.

However, the broader market faced headwinds due to post-earnings declines in popular stocks like Netflix and Tesla. The S&P 500 slipped 0.68%, while the Nasdaq Composite tumbled 2.05%.

In Taiwan, the world's largest chipmaker, Taiwan Semiconductor Manufacturing Company (TSMC), experienced a 3.11% decline in morning trade on Friday. This followed the company's announcement of its first quarterly net income decline in four years. TSMC reported a 10% drop in second-quarter revenue from a year ago, reaching NT$480.84 billion, with net income falling by 23.3% from a year ago to NT$181.8 billion.

Despite surpassing market expectations, TSMC's shares still experienced a downturn, largely attributed to the impact of macroeconomic conditions that led to decreased demand for electronics. TSMC, a key producer of chips for leading smartphone and laptop brands, is closely monitored by the industry due to its significant role in the global technology supply chain.

As the market remains sensitive to economic indicators and corporate earnings, investors are closely observing central banks' policy decisions and the ongoing global economic recovery. The volatility in Asia-Pacific markets is likely to persist until there is more clarity on these fronts.