FX.co ★ China Stocks Gain After Inflation Data

The Shanghai Composite inched up 0.1% to 3,940.4 on Wednesday, while the Shenzhen Component added 0.5% to close at 13,767, as renewed inflationary pressures from higher energy costs compounded worries about China’s slowing economy.

Annual consumer inflation accelerated to 0.8% in August from a six-month low of 0.5% in July, in line with market forecasts. Producer price inflation also quickened, rising to 3.8% from a three-month low of 3.5% and slightly beating expectations of 3.7%. The rise in inflation was driven primarily by higher energy prices amid persistent tensions in the Middle East.

Although China has exited a prolonged period of deflation, subdued consumer demand continues to constrain firms’ ability to pass higher input costs on to households, especially as economic growth slows and fiscal support becomes more measured.

Among notable gainers were Hygon Information Technology (+3.9%), Zhongji Innolight (+1.7%), Luxshare Precision Industry (+1.1%), and Suzhou Dongshan Precision (+3.1%).