Investing.com — Most Asian shares rose Wednesday, following gains in the technology sector, while Australian shares fell sharply as better-than-expected inflation data fueled concerns about higher interest rates.
Regional markets picked up some positive signals from Wall Street, where a recovery in heavyweight chip stocks, particularly NVIDIA Corporation (NASDAQ:), helped to finish higher. But concerns about a coming inflation reading caused economically sensitive stocks to retreat, closing lower.
US stock index futures remained subdued in Asian trading.
Australian shares are falling as high CPI sparks interest rate hike fears
Australia’s index was the worst performer in Asia, down 1% after inflation data for May came in higher than expected.
These figures reinforced expectations that the Reserve Bank of Australia could raise interest rates in August. Although the central bank did not explicitly mention the possibility of a rate hike, it struck a more aggressive tone than markets expected at a meeting last week.
Wednesday’s CPI reading showed inflation moving further away from the RBA’s annual target of 2% to 3% – a scenario likely to prompt a more hawkish stance from the central bank. Yields on Australian government bonds also shot up after the publication.
Nikkei and KOSPI backed by technological advancements
The Japanese index was the best performer in Asia, rising 0.9% on gains in heavyweight technology stocks, especially chip makers. Gains at chipmakers also helped South Korea add 0.3%.
Chipmakers rose after an overnight recovery from Nvidia, as the artificial intelligence darling recovered from three days of steep losses. Asian stocks linked to the company also posted strong gains on Wednesday, as did those of Japan Advantest Corp. (TYO:) rose 6.1%, while SK Hynix Inc (KS:) added 4.4%.
TSMC (TW:) (NYSE:), the world’s largest contract chipmaker, added 1% to trading in Taiwan.
Chinese stocks are sluggish, trade tensions persist
China’s and the indexes each fell 0.4%, while Hong Kong’s index rose marginally on Wednesday.
Sentiment toward China remained tense largely due to concerns about a potential trade war with the West, especially after Beijing noted such a possibility in light of European tariffs on Chinese electric vehicle imports.
Fears of a trade war caused Chinese indices to suffer steep losses through June, while cheers about more stimulus in the country also dried up.
In other Asian markets, Indian index futures pointed to a slightly positive open after the index rose to a record high on Tuesday. Renewed optimism about the Indian economy has been a key driver of stock prices in recent weeks as Indian markets rebounded following the outcome of the 2024 general election.
