Asian Stock Market: Trades in negative territory, all eyes are on the US PPI

Asian stock markets edges lower on Friday, with all eyes on the release of the US Producer Price Index (PPI), due later in the American session. Sydney, Hong Kong, and Shanghai stock markets decline while Japanese markets closed on holidays.

At press time, China’s Shanghai falls 1.19% to 3,215, the Shenzhen Component Index declines 1.24% to 10,910, Hong Kong’s Hang Sang falls 0.70% to 19,118, India’s NIFTY 50 is down 0.27%, and South Korea’s Kospi is up 0.07%.

In China, the inflation data on Wednesday raised concern about the pace of China's post-pandemic recovery. The Chinese Consumer Price Index (CPI) YoY fell 0.3% in July from 0% prior. This figure indicated the deflation in China.

Furthermore, US President Joe Biden issued an executive order on Wednesday prohibiting new US investments in China in sensitive technologies. That said, the US intends to target only Chinese companies that generate more than 50% of their revenue from quantum computation and artificial intelligence (AI).

However, the restrictions would apply to "narrow subsets" of the three domains, but the administration did not provide further details  and the proposal is available for public comment.

Despite a lack of any top-tier economic data release from the Japanese docket, the Japanese Yen approached a multi-week low of 144.63 amid thin volumes in the early Asian session on Friday.

Looking ahead, all eyes are on the highly anticipated US inflation data due later in the American session. The US Producer Price Index (PPI), due later in the day. The figure is expected to rise from 0.1% to 0.7% YoY. Traders anticipate that the data might convince the Federal Reserve (Fed) that it is now under control and no further interest rate increases are necessary.