US inflation, Sunac shares, TSMC fourth-quarter earnings

SINGAPORE – Asia-Pacific markets mostly fell on Thursday as Wall Street saw gains despite a sharp inflation report that set market expectations of a rate hike. Meanwhile, Covid concerns also came into focus as the World Health Organization warned that omicron cases were “off the charts”.

Chinese markets deepened their losses in the afternoon. TThe Shanghai Composite Index fell 1.17% to close at 3,555.26, while the Shenzhen Index fell nearly 2% to 14,138.34. Hong Kong’s Hang Seng lost 0.15% after rising earlier.

Shares of Chinese property developer Sunac fell more than 22% after it said in a note that it plans to sell 452 million new shares to controlling shareholder Sunac International Investment Holdings at HK$10 per share.

This will raise HK$4.52 billion ($580 million), as the company said 50% of the proceeds from the sale will go to repay loans, while the other half will be earmarked for other corporate purposes.

Genting Hong Kong shares also fell about 57% after the company announced that it may not be able to pay its debts and other obligations.

Japan also fell, with the Nikkei 225 down 0.96% to close at 28,489.13 after jumping nearly 2% on Wednesday, while the Topix lost 0.68% to 2005.58. Major retailers lost ground, with Seven & I stock down 3.28% and Fast Retailing losing nearly 2%.

In South Korea, the Kospi Index fell 0.35% and closed at 2,962.09.

Australia’s ASX 200 bucked the trend, up 0.48% to close at 7474.40. Financial and major mining companies saw gains. Rio Tinto jumped 4.13% while BHP rose 3.83%.

In earnings, Taiwan’s TSMC announced its fourth-quarter results, posting a record 16.4% rise in quarterly profit, according to Reuters. Net profit for the quarter rose to NT$166.2 billion ($6 billion) from NT$142.8 billion a year earlier.

Investors will also be watching Covid developments, with the World Health Organization reporting 15 million new cases of Covid-19 globally for one week, as omicron quickly replaces delta as the dominant variable worldwide.

Hot red inflation in focus

Data on Wednesday showed that inflation in the United States rose by 7% during December, the highest level since 1982. However, stocks rose despite this report.

The S&P 500 added nearly 0.28% to 4726.35, and the Nasdaq Composite rose 0.23% to 15,188.39 for the third positive day in a row. The Dow Jones Industrial Average, which swung between modest gains and losses during the session, ended up 38.3 points, or 0.11%, at 36,290.32.

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ANZ Research analysts Brian Martin & Daniel Hynes said in a note Thursday that the inflation data, which comes amid already rising prices in recent months, has set the stage for a case for rate hikes.

“US CPI inflation hit 7.0% y/y in December and is likely to be in the 7-8% range for several months now – reinforcing the need for rate hikes by the Fed, starting in March,” they wrote. “Putting an end to inflation is the Fed’s main priority for 2022.”

Currency and oil

The US Dollar Index, which measures the greenback against a basket of its peers, fell to new lows at around 95.1, hitting levels not seen since November. The latter was at 94.982 during Asian hours – continuing its decline from levels above 95 last week.

The Japanese yen was trading at 114.56 per dollar, having risen from levels above 115 in the previous sessions. The Australian dollar rose to $0.7284, after hitting its highest level since November overnight.

“[Australian dollar] It was supported by strong Australian retail sales and building approvals. But US dollar weakness is the main force supporting the AUD/USD this week, especially overnight,” Joseph Caporso, Head of International Economics at the Commonwealth Bank of Australia, wrote in a note.

Oil prices pared earlier gains and fell during Asian hours after hitting a two-month high on Wednesday due to tight supply. US crude fell 0.48% to $82.24 a barrel, while Brent crude fell 0.46% to $84.28 a barrel.



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