Hang Seng Index, ASX 200, Nikkei 225: The RBA Sinks the ASX 200 Again

Market Snapshot

The ASX 200 and Hang Seng Index both saw losses during the morning session. China's inflation data increased the risk of a further increase in consumer prices, which would need more forceful action by central banks to bring inflation to goal.

In January, China's annual inflation rate increased from 1.8% to 2.1%. The producer price index, however, fell by 0.8% compared to December's 0.7% decline. For central bankers, the increase in inflation was cause for concern.

Following hawkish Fed rhetoric from mid-week, a gloomy US session from overnight spilled over to the Asian morning session.

ASX 200

This morning, the ASX 200 was down 0.59%. Investor appetite was dampened by the RBA monetary policy announcement even if there were no Australian economic data to serve as a guidance for them.

The RBA raised its predictions for inflation and wage growth and issued a caution about future rate increases to prevent a "price-wage spiral." The RBA predicted that inflation would decelerate to 6.7% by mid-2023, up from 6.3%, in its announcement this morning. By June 2023, the RBA expects salaries to increase by 4.1%, up from its earlier prediction of 3.7%.

Bank stock prices were falling this morning. Westpac Banking Corp (WBC) and Commonwealth Bank of Australia (CBA) both had declines of 0.15% and 0.29%, respectively. National Australia Bank (NAB) and ANZ Group (ANZ) both suffered worse losses of 0.68% and 0.83%, respectively.

Stocks in the mining industry had a mixed day. Fortescue Metals Group (FMG) decreased by 1.07%, Rio Tinto (RIO) dropped by 0.69%, and BHP Group Ltd. (BHP) increased by 0.06%. Newcrest Mining (NCM), which decreased by 1.13%, went down with the rest of the market.

However, coal stock performance was among the poorest. The announcement that the Indian coal company Adani Group is trying to sell off coal shipments at a discount caused New Hope Corp. (NHC) to fall by 7.32%.