Asian markets fluctuate as US inflation data looms

Asian markets saw choppy trade Wednesday as investors jockeyed for position ahead of a key US inflation report later in the day, though Hong Kong extended gains on hopes for fresh Chinese stimulus.

Regional equities have enjoyed a broadly positive week so far after China signalled a long-running crackdown on the tech sector was nearing an end while officials also pledged help for ailing developers.

That was followed by reports that further growth-boosting measures and data showing new loans in the country had picked up in June thanks to a central bank interest rate cut.

Optimism is now building for more announcements aimed at kickstarting the world's number two economy as its post-Covid recovery sputters.

"Overall, China's data and news flow, along with market reaction, highlight Beijing's challenge, against a backdrop of anaemic demand," said National Australia Bank's Rodrigo Catril.

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"A meaningful fiscal spending announcement is what is needed for markets to become more positive on China."

Hong Kong was again the stand-out performer, adding around one percent, while Sydney, Singapore, Taipei, Manila and Jakarta were also up.

Shanghai, Tokyo, Seoul and Wellington dipped.

Wednesday sees the week's main event, the release of the US consumer price index, which forecasts suggest will show a further softening. That is followed by producer prices Thursday.

"Investors appear to be positioning for another decline in both core and headline," said SPI Asset Management's Stephen Innes "The key question is whether the data will beat consensus expectations and cause the Fed to take notice."

He added that while the Fed's favoured gauge of inflation is the personal consumption expenditures index -- which is due for release on July 28 -- this week's reports will be keenly followed as they come ahead of the bank's next policy meeting.

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Monetary policymakers are expected to hike rates this month but there is hope that the slowdown in inflation and figures pointing to a softening in the economy could mean that is the last.

However, observers warned that a surprise on the upside could put pressure on officials to keep tightening through the year.

Still, the dollar has weakened against its peers in recent weeks on bets the Fed is nearing its endgame on rates, with sterling among the best performers as sticky UK inflation means the Bank of England has to keep lifting.

The pound broke $1.29 Tuesday for the first time in 15 months, while the yen has bounced back to sit below 140 per dollar with the Bank of Japan seen shifting from its ultra-loose monetary policy at some point.

The euro was also at its highest since early May.

Key figures around 0230 GMT

Tokyo - Nikkei 225: DOWN 0.8 percent at 31,957.86 (break)

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Hong Kong - Hang Seng Index: UP 1.0 percent at 18,852.63

Shanghai - Composite: DOWN 0.1 percent at 3,218.16

Pound/dollar: UP at $1.2962 from $1.2931 on Tuesday

Euro/dollar: UP at $1.1030 from $1.1010

Dollar/yen: DOWN at 139.65 yen from 140.36 yen

Euro/pound: DOWN at 85.09 pence from 85.13 pence

West Texas Intermediate: UP 0.2 percent at $75.00 per barrel

Brent North Sea crude: UP 0.2 percent $79.59 per barrel

New York - Dow: UP 0.9 percent at 34,261.42 (close)

London - FTSE 100: UP 0.1 percent at 7,282.52 (close)

Source: AFP