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Asia shares mixed as Chinese food inflation soars, Japan GDP beats expectations

Lisa Micheal 2 Aug 8

Stocks in Asia Pacific were mixed Friday morning, as China released data showing that food inflation soared in July. Meanwhile, Japan's economy grew more than expected in the quarter ending June.

Mainland Chinese stocks declined after trading higher when markets first opened. The Shanghai composite fell 0.11% and the Shenzhen component was lower by 0.63%. The Shenzhen composite fell 0.56%, while Hong Kong's Hang Seng index slipped 0.2%.

In Japan, the Nikkei 225 gained 0.72% in morning trade, while the Topix index rose 0.52%. South Korea's Kospi advanced 1.25% and Australia's S&P/ASX 200 also rose 0.28%.

Overall, the MSCI Asia ex-Japan index added 0.35%.

Markets in Singapore and Taiwan are closed on Friday.

Japan's economy saw its third straight quarterly expansion in April-June, growing at an annualized rate of 1.8% in the period, according to government data on Friday. That was much better than a median forecast for 0.4% growth.

Compared against the previous quarter, gross domestic product gained 0.4%, also beating expectations.

Capital expenditure also rose 1.5% against the previous quarter, while private consumption grew 0.6%.

"The numbers were quite above consensus and I think, in particular, the large contribution from the domestic demand part of the economy was particularly robust," Kathy Matsui, vice chair and chief Japan strategist at Goldman Sachs Japan, told CNBC's "Squawk Box" shortly after the data release.

"We had at Goldman, an above consensus view but ... it came in even above that estimate and I think that kind of underscores the reality, at least from our point of view, that both consumption and private (capital expenditure) remain kind of the engines of Japan's economy at least for the foreseeable future." Matsui said.

China's consumer price index in July rose 2.8% on-year — its fastest year-on-year pace since February 2018, according to data from the National Bureau of Statistics. In particular, food prices soared in July to 9.1% from a year ago, amid surging prices of pork as the country battles African swine fever.

The producer price index for that period fell more than expected. It declined 0.3% year-on-year in July, the largest decline in annual terms since August 2016, Reuters reported.

Meanwhile, the People's Bank of China's fixed its midpoint for the yuan at 7.0136 against the dollar on Friday — the second time this week the benchmark rate was set weaker than 7. The onshore yuan last traded at 7.0489 against the greenback, and the offshore yuan changed hands at 7.0762 per dollar.

The Chinese currency has come into focus this week after it weakened past the 7-yuan-per-dollar mark on Monday for the first time since the 2008 global financial crisis, sending markets into a frenzy.

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.545 after touching lows below 97.5 yesterday.

The Japanese yen traded at 106.01 against the dollar after seeing an earlier high of 105.71.

The Australian dollar changed hands at $0.6807 after rising from levels below $0.678 in the previous session, as Reserve Bank of Australia governor Philip Lowe said Friday it was "reasonable to expect an extended period of low interest rates." Lowe's comments came on the back of a larger than expected rate cut by the Reserve Bank of New Zealand on Tuesday.

Oil prices rose in the morning of Asian trading hours, with the international benchmark Brent crude futures gaining 0.19% to $57.49 per barrel and U.S. crude futures adding 0.23% to $52.66 per barrel.

Here's a look at some earnings set to be released today:

  • Japan earnings: Japan Post
  • Hong Kong earnings: Sands China

— Reuters and CNBC's Fred Imbert contributed to this report.