Inflation in China grew more slowly than expected in December.
(Photo: AP)
Singapore The Tokyo stock exchange started trading stronger on Wednesday. Investors were particularly encouraged by comments from Federal Reserve Chairman Jerome Powell, which were received as a sign of strength and confidence. The Nikkei index, which comprises 225 values, was 1.9 percent higher at 28,746 points. The broader Topix index rose 1.4 percent to reach 2015 points.
“The Japanese market rose because investors who had been short before Powell’s statements bought them back,” said Takatoshi Itoshima, strategist at Pictet Asset Management. However, he warned, “But this spending spree could end before lunch as investors wait for US consumer price data.”
The Nikkei heavyweights grew, with chip maker Tokyo Electron up 4 percent, tech investor SoftBank Group up 5.1 percent, and clothing store Uniqlo Fast Retailing up 2 percent.
The Shanghai stock exchange was up 0.4 percent. The index of the most important companies in Shanghai and Shenzen shed 0.4 percent.
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Inflation in China is rising slightly
Inflation in China grew more slowly than expected in December. The producer price index (PPI) rose by 10.3 percent compared to the previous year, announced the National Statistics Office on Wednesday. The economists polled by Archyde.com had expected the PPI index to rise by 11.1 percent, after an increase of 12.9 percent in November. Inflation weakened after the Beijing government took action against high commodity prices and energy shortages. This included the order to lower the price of domestic coal.
The Chinese consumer price index (CPI) rose 1.5 percent in December compared to the same month last year. In a Archyde.com poll, economists had expected growth of 1.8 percent, after 2.3 percent in November. For the full year 2021, the CPI rose 0.9 percent year-on-year, after a 2.5 percent increase in 2020.
Weaker inflation leaves the door open for further monetary easing as growth in the world’s second largest economy slows and faces headwinds in 2022. A troubled real estate market, weaker growth in the manufacturing sector and the coronavirus pandemic are causing concerns. “The lower inflation gives the government scope for further monetary easing. In our opinion, the likelihood of an interest rate cut increases, ”said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
More: After days of anxiously looking at the next steps the US Federal Reserve will take, America’s stock markets are again becoming more confident today. The prices are rising slightly.
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