Asia markets mixed as investors digest U.S. consumer prices; China’s inflation eases

SoftBank posted a net loss of 970.14 billion Japanese yen for its 2022 fiscal year ended March, narrower than the 1.7 trillion loss in the same period a year before.

Revenue for the investment holding company came in at 6.57 trillion yen, 5.6% higher than the 6.22 trillion recorded in the previous fiscal year.

Most notably, its Vision Fund saw a record loss of 4.3 trillion yen in the fiscal year, versus a 2.55 trillion yen loss in the same period a year before.

Shares of SoftBank closed 0.85% down on Thursday.

Treasury Secretary Janet Yellen said the idea of U.S. lawmakers letting the nation default on its debt should be “unthinkable.”

Speaking to reporters ahead of the G-7 finance ministers and central bank governors meetings in Niigata, Japan, Yellen said she was aware of former President Donald Trump’s suggestion for Republican lawmakers to let the nation to default.

“America should never default,” she said. “Something that would so badly undermine the U.S. and global economy, I think it should be regarded by everyone as unthinkable.”

When asked about steps the Biden administration could take in the wake of a default, Yellen emphasized that lawmakers must raise the debt ceiling.

“There is no good alternative that will save us from catastrophe. I don’t want to get into ranking which bad alternative is better than others, but the only reasonable thing is to raise the debt ceiling and to avoid the dreadful consequences that will come,” she told reporters.

– Jihye Lee

Shares of Chinese electric vehicle maker Li Auto jumped by about 15% to an eight-month high as the company reported a first-quarter profit of 933.8 million yuan ($136 million), a stark reversal from the 10.9 million yuan loss a year ago.

Revenue for the first quarter nearly doubled to 18.33 billion yuan, up from 9.31 billion yuan in the first quarter of 2022. This was mainly attributable to the increase in vehicle sales, as well as the higher average selling price contributed by the Li L series.

For the second quarter, Li Auto expects to deliver between 76,000 and 81,000 vehicles and total revenue between 24.22 billion yuan and 25.86 billion yuan. That would represent an increase of 177.4% to 196.1% compared with the second quarter of 2022.

Over the past 12 months, shares of Li Auto have gained 29.82%, in contrast to counterparts like Nio and Xpeng, whose shares have slid 43.35% and 54% respectively.

Australia’s trade minister Don Farrell will arrive in Beijing to discuss removing China’s trade barriers on certain Australian exports, The Sydney Morning Herald reported.

The report added that Farrell will also discuss detained Australians Cheng Lei who was formally arrested in 2021 on suspicion of illegally supplying state secrets overseas as well as Yang Hengjun.

Australia has voiced concerns of the held Australians in China.

The report added that Farrell will aim to push for Cheng and Yang’s freedom as well as trade restrictions ahead of Australian Prime Minister Anthony Albanese’s potential visit to Beijing later in the year.

– Jihye Lee

New Zealand food inflation rose 12.5% year-on-year in April, the largest increase since September 1987, StatsNZ said in a Thursday release.

Grocery food prices rose by 14%, fruit and vegetable prices jumped by 22.5% and meat, poultry and fish prices rose by 9.5%.

Compared with March, food prices rose 0.5%, driven by restaurant meals and ready-to-eat food.

The New Zealand dollar strengthened 0.9% to 0.6370 against the U.S. dollar in Asia’s afternoon.

– Jihye Lee

The Japanese yen strengthened slightly to 134.14 against the greenback as the dollar index maintained lower levels after the U.S. consumer price index showed eased inflation overnight.

The dollar index inched lower in Asia’s morning to 101.48. China’s onshore yuan weakened marginally to 6.9389 against the greenback after its consumer and producer price index delivered a softer-than-expected reading.

South Korea’s won weakened 0.24% against the greenback to 1,320.95. The Australian dollar weakened by 0.1% to 0.6671 against the U.S. dollar.

China’s consumer price index rose 0.1% in April year-on-year, the slowest since early 2021. Month-on-month, prices declined by 0.1%.

Economists surveyed by Reuters expected to see consumer prices rise 0.4% from a year ago and remain unchanged from the previous month.

April’s reading comes after China’s inflation rate eased to 0.7% in March after marking a recent peak of 2.8% in September.

The Chinese yuan weakened by 0.04% to 6.9428 against the U.S. dollar.

Consulting firm Capvision Partners said on Wednesday chief executive Xu Rujie will chair a three-person internal “compliance committee” to “actively address” demands by Chinese authorities about the company’s perceived negligence of its national security responsibilities.

This follows a state media report earlier this week on the state’s investigation into Capvision’s operations in the world’s second-largest economy.

“We are deeply aware we have failed to fully comply with national security responsibilities in our past business activities and there are major hidden dangers and loopholes that have led to serious danger to the country’s national security,” Shanghai-based Capvision said in a statement, according to a CNBC translation.

— Clement Tan

The Philippines’ first quarter gross domestic product grew 6.4% year on year, higher than the 6.1% expected by economists polled by Reuters.

The reading marked the lowest growth seen in eight quarters. Quarter-on-quarter, the economy grew 1.1%, also higher than the 0.9% forecasted.

The country’s statistics authority said wholesale and retail trade as well as repair of motor vehicles were main contributors to growth in the first quarter.

— Lim Hui Jie

The Bank of Japan’s emphasized in its April meeting that the central bank should maintain its current ultra dovish monetary policy and take note of wage increases in its 2% inflation target.

In its summary of opinions released for the April 27 meeting, the BOJ was of the view that achievement of its 2% inflation target is coming into sight, but added that “it is appropriate that the Bank continue with monetary easing for the time being.”

The BOJ noted that wages are now projected to rise more than expected in this year’s negotiations, and that signs of a “virtuous cycle” between wages and prices have started to emerge in Japan’s economy.

But, it is necessary for the central bank to continue to “firmly support the momentum for wage hikes through monetary easing, so that the nominal wage growth rate will rise sufficiently relative to prices,” it said.

The BOJ estimates that the country’s consumer price index is likely to be above 2% for the time being, due to a pass-through to consumer prices of past rises in import prices.

However, it is expected to fall below 2% from the third quarter of 2023, with the pass-through peaking out, it said.

— Lim Hui Jie

Goldman Sachs has named the three global companies expected to benefit from the German government’s plans to spend nearly half a trillion euros on renewable energy infrastructure.

Goldman Sachs has estimated that this plan will create investment opportunities worth nearly €400 billion ($440 billion) in clean energy and power grid infrastructure.

CNBC Pro subscribers can read more about the three companies here.

— Ganesh Rao

Asian companies exposed to artificial intelligence have seen a 30% increase in value since November 2022 – when ChatGPT was unveiled.

However, HSBC has warned that investors should consider three significant risks before investing in AI stocks.

CNBC Pro subscribers can read more about the three risks here.

— Ganesh Rao

China’s inflation for April is expected to fall further to 0.3%, according to a Reuters poll of 37 economists. The country will release its consumer price index Thursday.

Should the forecast prove accurate, that would mark the third-straight month of decline in the inflation rate, and the lowest reading since February 2021, when inflation was at -0.2%.

China’s inflation stood at 0.7% in March after coming down from a peak of 2.1% in January.

— Lim Hui Jie

Bitcoin and gold prices moved higher Wednesday morning after the latest CPI report showed inflation rose in April but the increase was slightly smaller than expected.

Bitcoin rose 2% to $28,241.30, according to Coin Metrics, while gold futures hit a session high of $2,056.

Meanwhile, the U.S. dollar index fell to as low as 101.305 and is in jeopardy of going negative for the week – which would make it its third negative week in a row.

Bitcoin’s correlation to gold has been sitting at historic highs. The cryptocurrency has an inverse relationship with the dollar index.

— Tanaya Macheel, Gina Francolla

The U.S. consumer price index rose 4.9% in April from the year-earlier period, the Labor Department said Wednesday. Economists polled by Dow Jones expected a 5% year-over-year increase.

— Jeff Cox

Shares of Google-parent company Alphabet gained more than 4% as the search giant unveiled new gadgets and details on its generative artificial intelligence tools.

Among the announcements at its I/O developer conference in Mountain View, California, Google showed off the Pixel 7a Android phone. The company also removed the waiting list for its conversational chatbot Bard and revealed new AI offerings for its Search business and online office suite.

— Samantha Subin