New Zealand Inflation Survey Declines to lowest level in 2 1/2 years – Asia Market Wrap

Trading resumed after a vacation, with shares rising in Asia helped by gains in South Korean and Japanese markets. US equity futures fell ahead of inflation data that is expected later on Tuesday.

The Nikkei 225 index in Japan rose to its highest level since November 2022, led by tech shares after Tokyo Electron increased its full-year revenue and profit guidance. Markets are closed in China for the Lunar New Year holidays. MSCI’s Asia-Pacific equity index rose for the first time in four days, led by stocks in South Korea, where the benchmark KOSPI rose about 1% as expectations for a regulatory push to boost the local market continue.

The recent softness is attributed to remarks made by Bank of Japan officials that the central bank will not rush to exit supportive policy. The economy is expected to rebound to annualised growth of 1.2% in the fourth quarter following a brutal contraction in the summer. The value of the yen fell to trade around 149 per dollar on Tuesday, down from 140 at the beginning of the year.

Prior to the US consumer price index report for January, Treasuries remained stable in Asia. The report is anticipated to show the first reading of year-over-year headline inflation below 3% since March 2021, lending credence to the disinflation narrative that has propelled equities higher recently.

The kiwi weakened after New Zealand inflation forecasts dropped to the lowest level in 2.5 years.