Asian markets headed lower for a second day early Wednesday, with better-than-expected economic data from Japan and China failing to stem the selling.
But Chinese stocks made gains after the People’s Bank of China set the yuan reference rate—which determines the currency’s trading levels—at its weakest point against the dollar in four years.
As Chinese markets opened, the National Bureau of Statistics reported the 45th consecutive month of producer-price deflation. Factory-gate prices fell 5.9% from a year earlier, while consumer prices rose 1.5%. Both measures were slightly better than economists had expected in a Wall Street Journal poll.
After an initial selloff, mainland Chinese markets rallied, with the Shanghai Composite last up 0.7% and the smaller Shenzhen market gaining 0.3%. But Hong Kong’s Hang Seng Index fell 0.3% while the Hang Seng China Enterprises Index, a gauge of Chinese companies with listings offshore, sank 0.8%. Elsewhere in Asia, Japan’s Nikkei Stock Average extended declines into a second day, down 0.8% after a brief rally sparked by machinery orders data that sharply beat expectations.
Australia’s S&P/ASX 200 slipped 0.1% after consumer confidence for December deteriorated, while South Korea’s Kospi was flat. The U.S. dollar index, which tracks the greenback against a basket of currencies, was last down 0.1% at 98.32. Gold held steady, with bullion last up 0.2% at $1,076.90.
Some economists said the yuan’s depreciation below levels in August reflected underlying weakness in China’s economy.
Reuters reported falling Chinese factory producer prices continuing its trend and noted the ongoing weakness in commodities as shown in The Thomson Reuters Core Commodity index (TRJCB) Tuesday trading "at its lowest level since November 2002."
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