Asia report: Markets join global rally, China inflation lags
By Josh White
Date: Wednesday 10 Sep 2025
(Sharecast News) - Asia-Pacific equities advanced on Wednesday, following Wall Street higher as investor sentiment was buoyed by rising expectations of a US Federal Reserve rate cut.
Patrick Munnelly, market strategy partner at TickMill, said: "Global equities posted their sixth day of positive returns on Wednesday, largely driven by significant gains in technology stocks and growing speculation that the Federal Reserve might implement interest rate cuts in response to an ongoing decline in employment figures."
The moves came as China reported weaker-than-expected consumer price data for August, while its producer price index showed improvement from July's decline.
Munnelly noted that "in China, consumer prices dropped beneath the zero threshold for the first time in three months, signalling the persistence of deflationary pressures within an economy that appears to be on the brink of a slowdown."
In South Korea, unemployment edged higher on a seasonally adjusted basis, but the Kospi still surged to a record close.
Munnelly observed that "in South Korea, the stock market appeared poised to achieve a record closing print, while markets in Japan and Hong Kong also showed solid gains."
Markets join global rise on back of Fed rate cut hopes
In Japan, the Nikkei 225 rose 0.91% to 43,855.00, with SoftBank Group jumping 7.28% alongside strong gains for Furukawa Electric, up 5.69%, and Fujikura, ahead 5.62%.
The broader Topix index added 0.6% to 3,140.97.
Chinese shares were modestly higher as the Shanghai Composite added 0.13% to 3,812.22, led by a 20% surge in Guangdong Jia Yuan Technology.
Harbin Xinguang Optic Electronics climbed 13.71% and Beijing Capital Development gained 10.12%.
The Shenzhen Component rose 0.38% to 12,557.68.
Hong Kong's Hang Seng Index advanced 1.01% to 26,200.26, supported by a 4.63% rise in Lenovo Group, JD Logistics up 4.45%, and Sun Hung Kai Properties ahead 4.28%.
South Korea's Kospi 100 soared 2.02% to 3,371.50, as Hyundai Electric Energy Systems gained 8.53%, SK Square rose 7.59%, and KB Financial Group advanced 7.01%.
In Australia, the S&P/ASX 200 edged 0.31% higher to 8,830.40, with Mercury NZ leading the gains at 6.54%, followed by Telix Pharmaceuticals up 4.34% and Judo Capital ahead 4.23%.
New Zealand's S&P/NZX 50 added 0.17% to 13,276.24, driven by Pacific Edge, which surged 12.77%, while Scales Corporation gained 5.62% and Contact Energy rose 2.41%.
In currencies, the dollar was little changed against the yen at JPY 147.40, down 0.01%.
It weakened 0.38% against the Aussie to last trade at AUD 1.5128, and lost 0.35% on the Kiwi to change hands at NZD 1.6813.
Oil prices extended gains, with Brent crude futures last up 0.65% on ICE at $66.82 per barrel, and the NYMEX quote for West Texas Intermediate climbing 0.72% to $63.08.
Munnelly added that "oil prices experienced a sharp increase following an Israeli airstrike in Qatar, which raised concerns about a potential escalation in the Middle East crisis."
Consumer prices fall more than expected in China, Korean jobs data shows challenges
In economic news, China's consumer prices fell more than expected in August, underlining persistent weakness in domestic demand and renewed pressure on policymakers to step up stimulus.
Data from the National Bureau of Statistics showed the consumer price index declined 0.4% year-on-year, compared with expectations for a 0.2% drop.
Core inflation rose 0.9%, the highest since February 2024, with notable increases in household appliances and clothing.
However, food prices fell sharply, down 4.3% from a year earlier, with pork, vegetables and fruit all contributing to the decline.
Deflation in consumer durables deepened to 3.7%, with analysts warning the pace was more severe than during the 2008 financial crisis.
The producer price index fell 2.9% from a year earlier, its third consecutive year of declines, although the drop was in line with forecasts and showed signs of easing.
Economists noted the narrower fall partly reflected government measures to curb excessive price competition, but cautioned that a sustained recovery remained distant given weak global demand and Beijing's reluctance to reduce industrial capacity.
China's inflation target for 2025 is around 2%, well above current levels, with services inflation edging up only modestly to 0.6%.
Meanwhile, South Korea's labour market data highlighted structural challenges despite overall employment growth.
Statistics Korea reported that 328,000 people in their 30s classified themselves as "resting" in August, meaning they were economically inactive and not seeking work - the highest level on record for that month.
Total employment stood at 28.97 million, up 166,000 from a year earlier, but job creation slowed for the third straight month.
Employment gains were concentrated among those aged 60 and above, with 401,000 additional jobs, while jobs for people in their 20s fell by 195,000 and those in their 40s declined by 73,000.
Youth employment continued to deteriorate, with the employment rate for 15- to 29-year-olds dropping 1.6 percentage points to 45.1%, marking a 16th consecutive month of year-on-year decline.
Job losses were steepest in agriculture, forestry and fisheries, which shed 138,000 roles, alongside persistent weakness in construction and manufacturing.
The number of people giving up on job searches also rose by 43,000 to 409,000, underscoring strains in the country's labour market.
Looking ahead, Munnelly said: "In light of further indications of a deteriorating labour market, investors are keenly awaiting inflation data set to be released in the upcoming days.
"This data will play a crucial role in shaping the discussions at next week's Fed meeting as well as influencing the trajectory of possible rate cuts extending beyond 2025.
"This situation poses a critical evaluation of Wall Street's capacity to sustain the gains seen throughout this month."
He added that the Federal Reserve continued to be "the key narrative" influencing global markets.
"Meanwhile, European investors should remain vigilant about geopolitical events, especially after Poland, a NATO member, recently shot down Russian drones that it claimed violated its airspace during an assault on western Ukraine."
Reporting by Josh White for Sharecast.com.
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