Asian shares mostly fall as investors watch for inflation

Asian shares mostly fall as investors watch for inflation

TOKYO — Global shares were mostly lower Friday in muted trading, as investors kept an eye on inflation and awaited the outcome of a Communist Party congress in China.

France’s CAC dipped 1.6% in early trading to 5,988.78. Germany’s DAX lost 1.4% to 12,584.52.

Britain’s FTSE 100 shed 1% to 6,871. 64 as the Conservative Party was preparing to replace Liz Truss as prime minister within a week after she resigned on Thursday after a turbulent 45-day term, conceding that she could not deliver on her tax-cutting economic plans. Former Prime Minister Boris Johnson is one of many candidates who are expected to compete to take her place. Rishi Sunak, former Treasury chief, and Penny Mordaunt, House of Commons leader are two other candidates.

On Wall Street the future for Dow industrials fell 0.5%, while the S&P 500 Future was down 0.7%.

China’s ruling Party Congress is expected to conclude Saturday with the endorsement of leader Xi Jinping. This meeting, which is held every five years, sets the country’s agenda for the next five years and can signal potential changes in policy direction. One thing that seems unlikely is the end of severe COVID rules, which are likely to continue to disrupt business and personal life for many months.

Another development was that Japan’s core consumer prices increased 3.0% in September compared to a year ago, according government data released Friday. This was the largest increase in eight years. It would also have been the highest in more than 30 years if the impact of introducing and raising the consumption tax was excluded.

The Bank of Japan maintains an ultra-low interest rates policy while the Federal Reserve and other central bank raise rates to combat rising prices. The Japanese central bank has been working to prevent deflation, which is the continuing downward spiraling in prices, until recently.

In currency trading, the U.S. dollar rose to 150. 93 Japanese yen from 150. 15 yen, adding to pressure on the BOJ to tweak its monetary policy since a weaker yen amplified rising prices due to the higher costs for imports. The euro was little changed at 97. 37 cents, inching down from 97. 87 cents.

Japan’s benchmark Nikkei 225 declined 0.4% to finish at 26,890.58. Australia’s S&P/ASX 200 shed 0.8% to 6,676.80. South Korea’s Kospi edged down 0.2% to 2,213.12. Hong Kong’s Hang Seng fell 0.4% to 16,211. 12, while the Shanghai Composite gained 0.1% to 3,038.93. Shares rose 0.1% in Mumbai.

” The overall mood is cautious with the pareing of gains on Wall Street and yields trending lower on a more hawkish outlook,” Yeap Jun Rong (a market strategist at IG) said in a report.

Investors remain concerned about inflation, since higher interest rates tend to discourage borrowing and investments, slowing economic activity. This could lead to recession. Corporate earnings are still a major focus.

The U.S. labor market is strong. According to the latest government data, the number of Americans applying in for unemployment benefits fell last week. This is a historic low. The Fed must keep raising interest rates because of the strong job market. The central bank has raised its key interest rate to a range of 3% to 3.25%. It was close to zero six months ago.

In energy trading, benchmark U.S. crude fell 81 cents to $83. 70 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gave up 77 cents to $91. 61 a barrel.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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