FX.co ★ Asian Shares Slide As China Deflation Pressure Deepens

Asian stock markets experienced declines on Thursday as investors responded to various factors, including the U.S. President-elect Donald Trump's tariff threats, a strengthening U.S. dollar, and underwhelming inflation data from China.

The U.S. dollar maintained its strength, bolstered by rising Treasury yields driven by expectations that Trump's fiscal and tariff policies could contribute to inflationary pressures and maintain elevated U.S. interest rates for an extended period.

Gold saw modest gains in Asian trading following a four-week high achieved in the prior session. With the release of weaker private employment data on Wednesday, attention now turns to the U.S. nonfarm payrolls report due Friday, which is expected to shed more light on the Federal Reserve's interest rate trajectory for 2025.

Oil prices ticked up slightly, recovering from a over 1 percent decline on Wednesday.

China's Shanghai Composite Index fell by 0.58 percent to close at 3,211.39, as the latest inflation statistics highlighted continued deflationary challenges in the world's second-largest economy. Meanwhile, Hong Kong's Hang Seng Index slipped 0.20 percent to 19,240.89.

The latest data indicated that China's consumer inflation remained near zero in December, with producer prices continuing to decline despite efforts by Beijing to implement stimulative measures aimed at boosting domestic demand.

Japanese markets saw a significant downturn following data indicating that Japanese workers' base salaries increased at the fastest rate in 32 years, a development that could prompt the central bank to consider an interest rate hike this month.

The Nikkei 225 dropped 0.94 percent to 39,605.09, while the more comprehensive Topix Index decreased 1.23 percent to 2,735.92.

Technology stocks, including Advantest and Tokyo Electron, fell approximately 2 percent after reports suggested the Biden administration intends to impose further restrictions on the export of artificial intelligence chips.

In Seoul, stocks ended the day relatively unchanged after a volatile session. The Kospi Index closed slightly higher at 2,521.90, marking a fifth consecutive session of gains amid foreign investment inflows.

SK Hynix, a leading chipmaker, surged by 5.3 percent, while Samsung Electronics, a market leader, declined by 2.1 percent.

Australian markets closed marginally lower, ending a five-day winning streak. The S&P/ASX 200 Index dipped 0.24 percent to 8,329.20, impacted by declines in the mining, financial, and energy sectors.

Gold miners experienced substantial gains as bullion prices reached a near four-week high. Northern Star Resources climbed 2.9 percent, and Evolution Mining rose by 2 percent. The broader All Ordinaries Index settled 0.25 percent lower at 8,577.80.

Across the Tasman Sea, New Zealand's S&P/NZX 50 Index dropped 0.76 percent to 12,943.74, extending losses for a third consecutive session.

In the United States, stock markets ended with mixed performance overnight following the release of varied employment data. The ADP private sector employment report revealed fewer jobs were added in December than economists had projected.

In contrast, separate data showed jobless claims for the previous week unexpectedly decreased to their lowest level in nearly eleven months.

Minutes from the Federal Reserve's December meeting revealed that officials anticipate a slower pace of rate cuts in 2025 and remain concerned about the inflationary effects of Trump's policies.

The tech-focused Nasdaq Composite finished slightly lower, while the Dow Jones Industrial Average rose 0.3 percent and the S&P 500 gained 0.2 percent.

U.S. markets are closed today in observance of a National Day of Mourning for former President Jimmy Carter.