Asia shares turn mixed, China disinflation a drag

SYDNEY, July 10 (BNA): Asian stock markets turned mixed Monday as a surprisingly low Chinese inflation reading highlighted troubles in its economy, ahead of data on US inflation and corporate earnings later in the week.

Chinese consumer price figures showed a decline in June, substantially unchanged from a year earlier, while producer prices slid deeper into negative territory, Reuters reported.

The error indicates that there is ample scope for further easing of monetary policy, but also underscores the challenge Beijing faces in revitalizing its economy and avoiding a deflationary spiral.

The yuan gave up early gains on the news, though Chinese blue chips were still up 0.5% on hopes of easing regulations on the technology sector. Shares in Hong Kong’s Alibaba Group joined the rally.

Gains in China helped MSCI’s broadest index of Asia-Pacific shares out of the Japanese company added 0.3%. Japan’s Nikkei fell 0.1% in the wake of the yen’s rise, while South Korea’s index added 0.2%.

EUROSTOXX 50 futures were down 0.1% while FTSE futures were flat. S&P 500 and Nasdaq futures fell 0.2%, adding to last week’s losses.

Earnings season kicks off later this week with reports from JPMorgan Chase, Citigroup, Wells Fargo, State Street and PepsiCo.

Analysts at Goldman Sachs noted, “The consensus expects a 9% annual decline in S&P 500 EPS driven by steady sales growth and margin pressure.”

They added, “We expect companies to be able to meet the consensus-determined threshold.” “Negative EPS reviews for 2023 and 2024 appear to have abated and review sentiment has improved.”

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