Asian stocks tread water with US inflation data in focus

Investing.com-- Most Asian stocks moved in a tight range on Friday as a stellar rally on the back of a dovish Federal Reserve now appeared to be cooling, with focus turning to key U.S. inflation readings due later in the day.

Regional stocks took mixed cues from a volatile overnight session on Wall Street, as steep early losses gave way to a swathe of bargain buying towards the close, which helped U.S. benchmarks close higher.

Asian stocks also saw a heavy degree of profit taking in recent sessions, although most regional bourses were still headed for small weekly gains.

Investors were also cautious before PCE price index data- the Fed’s preferred inflation gauge, due later in the day. Any signs of sticky inflation are likely to dent expectations of early interest rate cuts in 2024.

A revised reading on third quarter U.S. GDP showed some cooling in growth, but not to the extent that the Fed will consider early interest rate cuts.

Japanese stocks steady after Toyota-driven losses

Japan’s Nikkei 225 index rose 0.2% on Friday, as it steadied after a 1.6% slide in the prior session. Losses in automobile stocks battered the Nikkei after Toyota Motor Corp (TYO:7203)- the country’s biggest carmaker- suspended production in a major unit after revelations of widespread misconduct.

Data on Friday showed that Japanese inflation eased as expected in November, but still remained above the Bank of Japan’s annual 2% target. The reading also gave little clarity on when the BOJ plans to pivot away from its ultra-dovish policy.

The Nikkei was up 0.7% this week and remained within sight of a 33-year high.

Australia’s ASX 200 was flat after racing to an over 10-month high earlier this week, amid hopes that the Reserve Bank was done raising interest rates. The index was also among the better performers in Asia this week, and was headed for a 0.8% rise- its fourth straight week in black.

South Korea’s KOSPI added 0.3% and traded close to a four-month high. The index’s heavy exposure to technology put it on course for a 1.7% gain this week.

The KOSPI was also set for an eighth straight week of gains, having marked a strong run of gains after the government banned short selling in October.

Futures for India’s Nifty 50 index pointed to a muted open, with the index remaining within sight of record highs hit earlier in December. But a heavy dose of profit taking put the Nifty on course for a 0.9% loss this week.

Chinese shares lag as economic jitters persist

Chinese stock indexes largely lagged their Asian peers this week, and traded close to annual lows amid persistent concerns over an economic recovery in China.

The bluechip Shanghai Shenzhen CSI 300 index fell 0.2% on Friday, and was just above a near five-year low touched on Thursday. The index was also headed for a sixth straight week in red.

The Shanghai Composite fell 0.1% and traded at a 14-month low, while Hong Kong’s Hang Seng index rose 0.4% but was headed for a 0.5% loss this week.

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