Most Asian stocks edged lower on Thursday as weaker-than-expected Chinese inflation data pointed to a sluggish economic recovery in the country, while fears of a more hawkish Federal Reserve continued to chip away at sentiment. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.3% each after data showed consumer inflation grew substantially less than expected in February, while producer inflation worsened as spending failed to pick up after the lifting of anti-COVID measures earlier this year. The data indicated that a Chinese economic rebound is likely to take longer than expected this year, which bodes poorly for markets exposed to the Asian giant. Data on Wednesday also showed that Chinese import demand remained weak. Most China-exposed stock markets kept to small ranges on Thursday. The Taiwan Weighted index and South Korea’s KOSPI both fell 0.2%, while Hong Kong’s Hang Seng rose 0.2%. Japan’s Nikkei 225 index was a key outlier, rising 0.6% on Thursday and extending gains into a fifth consecutive session amid increasing bets that the Bank of Japan will leave its ultra-loose policy unchanged on Friday.

The Nikkei Shrugged Off Data Showing That Japanese Economic Growth.

stagnated in the fourth quarter of 2022. Broader Asian markets were nursing steep losses this week, after Federal Reserve Chair Jerome Powell flagged more aggressive interest rate hikes by the central bank, citing recent strength in inflation and the labor market. Data released overnight furthered this notion, with a gauge of private sector payrolls reading higher-than-expected for the month through mid-February. Focus is now squarely on nonfarm payrolls data for February, due on Friday, with any signs of resilience in the jobs market giving the Fed more economic headroom to hike rates. The Fed’s Beige Book report, released on Wednesday, also indicated some resilience in the U.S. economy. Rising interest rates battered Asian stock markets through 2022, as higher yields drove capital away from risk-heavy markets. This trend has persisted so far in 2023, and is expected to continue as markets price in a more aggressive Fed. India’s Nifty 50 and BSE Sensex 30 indexes kept to a small range on Thursday, as heavyweight technology stocks weakened. Shares of Adani Enterprises Ltd (NS:ADEL) rose 0.2%, extending a recovery into a sixth straight session after boutique investment house GQG Partners said it was likely to invest more in the conglomerate following a $1.7 billion investment earlier this month.