Asia Stocks Weaken as Chinese Inflation Diverges

Equity markets declined after data showed Chinese producer prices rising at the fastest pace since just after the Beijing Olympics, while consumer prices were weaker than expected.

The Hang Seng Index and Shanghai Composite Index both fell the most this month, while a gauge of Chinese stocks traded in Hong Kong had the steepest drop since mid-January. Japanese equities gave up some of their early gains but remained higher, supported by a weaker yen. Bonds remained under pressure following a strong U.S. private jobs report that spurred gains in the dollar and drove down Treasuries. Oil rose from a three-month low, and gold declined for a fourth day.

Analysts have lifted estimates for Friday’s non-farm payrolls on the back of an ADP reading that showed the U.S. added the most workers in almost three years. A rate increase is priced into the market as a near-certainty. The bull market in U.S. stocks has entered its eighth year on one of the steepest post-election rallies in history.

What’s ahead for the markets:

• Mario Draghi is expected to keep QE going until the end of the year with underlying price pressures muted. The ECB’s policy decision will be announced at 1:45 p.m. Frankfurt time and Draghi will hold a press conference 45 minutes later.
• Official U.S. jobs data for February are due Friday. Employers probably added around 200,000 workers to payrolls, in line with the average over the past six months and a sign of steady job growth, economists forecast.

Here are the main moves in markets:

Currencies

• The offshore yuan was down 0.2 percent at 6.9273 per dollar, the weakest in two months, as of 11:52 a.m. in Hong Kong. China’s producer price index climbed 7.8 percent in February, the highest reading since September 2008, and the consumer price index rose 0.8 percent, less than the 1.7 percent increase that was forecast.
• The Bloomberg Dollar Spot Index rose 0.1 percent after gaining 0.4 percent Wednesday.
• South Korea’s won slumped 0.9 percent to 1,156.13 per dollar. The Japanese yen clawed back some losses, but was still down 0.1 percent at 114.45 per dollar.

Stocks

• The Hang Seng Index retreated 1 percent, its biggest drop since Feb. 1, while the Shanghai Composite Index fell 0.9 percent, the most since Feb. 27. The Hang Seng China Enterprises Index slid 1.5 percent.
• South Korea’s Kospi gave up earlier gains and was down 0.1 percent, while the Topix Index in Japan held on to a 0.1 percent rise.
• The S&P/ASX 200 index extended its loss to 0.4 percent.
• Futures on the S&P 500 were down 0.1 percent after the benchmark index lost 0.2 percent on Wednesday. The index is up 5.5 percent in 2017.

Bonds

• Yields on 10-year U.S. Treasuries were steady at 2.56 percent after climbing four basis points the previous session.
• Australian yields for similar-dated government notes were up six basis points at 2.92 percent after hitting 2.94 percent, the highest since December 2015.

Commodities

• West Texas Intermediate crude rose 0.7 percent to $50.62 a barrel. It tumbled more than 5 percent the previous session to the lowest close since Dec. 7.
• Gold was down 0.1 percent at $1,207.62 an ounce, slumping for a fourth day.