Chinese stocks jump; data shows China’s inflation in April heated up above expectations

SINGAPORE — Shares in Asia-Pacific were mixed in Wednesday morning trade as investors watched for market reaction to the release of higher-than-expected Chinese inflation data for April.

Mainland Chinese stocks led gains regionally, with the Shanghai Composite rising 1.63% while the Shenzhen Component climbed 2.888%. Hong Kong’s Hang Seng index advanced 1.72%.

China’s producer price index for April rose 8% year-on-year, data released by the country’s Bureau of Statistics showed Wednesday, higher than expectations for a 7.7% increase by analysts in a Reuters poll.

Consumer inflation also rose more than expected. The consumer price index climbed 2.1% year-on-year, above expectations for a 1.8% gain by analysts in a Reuters poll.

The data releases come as the mainland continues to battle its worst Covid outbreak since the initial phase of the pandemic in early 2020.

“China’s going to be struggling with a lot of economic issues including the supply chain and inflation factors but I’m a little less worried about supply chain than I perhaps was six months ago,” Andrew Collier, managing director at Orient Capital Research, told CNBC’s “Street Signs Asia” on Wednesday.

“Even in Shanghai, 70% of [the] manufacturing capacity is online. The recent American Chamber of Commerce survey said only 15% of their companies are not producing although most of them, two-thirds have slowdowns,” Collier said.

Elsewhere in the broader markets, the Nikkei 225 in Japan gained 0.32% while the Topix index shed 0.27%.

South Korea’s Kospi dipped fractionally while the S&P/ASX 200 in Australia sat 0.1% lower.

MSCI’s broadest index of Asia-Pacific stocks outside Japan traded 0.9% higher.

The U.S. April consumer price index is also set to be released Wednesday stateside, and is expected to come in slightly below March’s 8.5% which could signal that inflation has reached a peak.

“The US CPI for April is today’s, indeed the week’s, highlight,” Joseph Capurso, head of international economics at Commonwealth Bank of Australia, wrote in a note.

“The consensus of US economists expect headline inflation to decelerate significantly from 1.2%/mth in March to only 0.2%/mth in April because retail petrol prices have stabilised. But core inflation is expected to step up slightly from 0.3%/mth in March to 0.4%/mth in April,” Capurso said.

Oil prices were higher in the afternoon of Asia trading hours, with international benchmark Brent crude futures up 1.84% to $104.35 per barrel. U.S. crude futures climbed 1.76% to $101.52 per barrel.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 103.86 — continuing to hold above levels below 103.8 seen earlier in the week.

The Japanese yen traded at 130.37 per dollar, stronger as compared with levels above 130.5 seen against the greenback earlier this week. The Australian dollar changed hands at $0.696 as it struggles for a bounce after declining from above $0.70 earlier in the week.