Stocks mixed as Chinese inflation bump increases uncertainty

TOKYO – Stocks were mostly higher Tuesday as economic data raised questions of how China might curb speculative market bubbles as inflation rises.

KEEPING SCORE: In Europe, Germany’s DAX was up 0.2 per cent to 11,588 while the CAC40 of France was flat at 4,889. Britain’s FTSE 100 gained 0.5 per cent to 7,273, pushing further into record territory as it benefits from a drop in the pound. Wall Street looked set to open without much direction, with S&P 500 and Dow futures both largely flat.

CHINA ECONOMY: China’s economy is estimated to have grown 6.7 per cent in 2016, officials said, within the target range of 6.5 per cent to 7 per cent. Beijing will continue to cut excess capacity in steelmaking and other industries, the officials from the main planning agency told reporters. Fresh data showed China’s factory price index hit a five-year high in December at 5.5 per cent over a year before. Consumer prices rose 2.1 per cent in December and 2 per cent in 2016.

ANALYST VIEW POINT: Higher prices could delay China’s efforts to curb excess industrial capacity, while the central bank is still focused on curbing speculative pressures and mounting debt, David Qu and Raymond Yeung of ANZ said in a commentary. “Given slowing growth and uncertainties in the economy, such as exports and fixed asset investment, we do not think the central bank will start to tighten in the first half of 2017,” they said. “However, high inflation rates will push market interest rates higher.”

ASIA’S DAY: Japan’s Nikkei 225 index dropped 0.8 per cent to 19,301.44 and the Kospi in South Korea slipped 0.2 per cent to 2,045.12. Hong Kong’s Hang Seng added 0.8 per cent to 22,744.85. The Shanghai Composite index shed 0.3 per cent to 3,161.67 and Australia’s S&P ASX 200 fell 0.8 per cent to 5,760.70 after weaker-than-expected retail sales data. India’s Sensex rose 0.6 per cent to 26,887.06.

ENERGY: U.S. benchmark crude oil steadied, gaining 6 cents to $52.02 a barrel in electronic trading on the New York Stock Exchange. It fell $2.03 on Monday. Brent crude, which is used to price oil sold internationally, gained 4 cents to $54.98.

CURRENCIES: The pound fell to $1.2151 from $1.2274 amid signs the British government may opt for a full break away from the European Union’s single market. The dollar fell to 115.90 yen from 116.01 yen in late trading Monday. The euro rose to $1.0564 from $1.0532.