Asian stocks edge higher as inflation dust settles, Japan surges

Investing.com-- Most Asian stocks rose slightly on Thursday, tracking some strength in Wall Street as markets bet that a recent rise in U.S. inflation will prove insufficient in eliciting more interest rate hikes from the Federal Reserve.

Japanese stocks were the best performers for the day, with the Nikkei 225 rising more than 1%, while the TOPIX added 0.7% as a swathe of weak economic readings drove bets that the Bank of Japan will still need to maintain negative interest rates for the time being.

Data on Thursday showed that Japanese core machinery orders fell sharply in July, amid deteriorating business confidence in the country’s biggest manufacturers. The reading, coupled with lukewarm increases in producer inflation, largely offset signals from the BOJ that it was considering an eventual end to negative rates.

SoftBank Group Corp. (TYO:9984) was among the few major outliers in Japanese shares, sinking more than 1% even as its chip designing unit Arm secured a $54.5 billion valuation in its U.S. initial public offering. 

But the valuation represented a haircut from the $64 billion valuation at which Softbank (OTC:SFTBY) had last month acquired a 25% stake in Arm. 

Markets look past inflation shock, Fed pause bets persist

Broader Asian markets crept higher, tracking some overnight strength on Wall Street even as U.S. consumer inflation grew more than expected in August. But the reading still saw traders sticking to expectations that the Fed will keep rates on hold next week. 

"The Fed will still keep rates on hold in September, but it means officials will almost certainly keep one final hike in their official forecasts, even though we don’t think they will carry through with it," analysts at ING wrote in a note.

Australia’s ASX 200 rose 0.2% after data showed that the country’s labor force grew more than expected in August.

South Korea’s KOSPI jumped 0.8%, boosted by a near 1% rise in chipmakers SK Hynix Inc (KS:000660) and Samsung Electronics (KS:005930). U.S. technology stocks showed surprising resilience after the inflation reading, providing positive cues to regional players.

Futures for India’s Nifty 50 index pointed to a strong open, with local stocks set to extend gains even after the Nifty marked a record-high close on Wednesday. The index recently breached the closely-watched 20,000 level, which analysts say could invite more strong gains. 

Still, gains in most Asian markets were limited, given that more economic cues from the U.S. and China are due this week.

Chinese shares lag as EU probe stokes trade tensions 

Chinese stocks were among the few outliers for the day, with the Shanghai Shenzhen CSI 300 down 0.3%, while the Shanghai Composite lost 0.1%. Hong Kong’s Hang Seng index shed 0.4%, with major electric vehicle makers BYD (HK:1211), Xpeng (NYSE:XPEV) Inc (HK:9868) and NIO Inc (HK:9866) losing between 0.5% and 2% after the European Union opened a probe into Chinese subsidies for EV makers. 

The move ramped up concerns over worsening trade ties between Beijing and Brussels, given that it comes at a time when Sino-U.S. tensions are also on the rise. 

Markets also remained largely cautious towards China before more key economic indicators from the country this week, specifically industrial production and retail sales data due on Friday.