Morning Bid: Are China's inflation, capital flows tides turning?
By Jamie McGeever
(Reuters) — A look at the day ahead in Asian markets.
Signs of fatigue on Wall Street and mixed Chinese inflation data will set the tone for Asian markets on Monday, with growing expectations of a landmark policy change later this month from the Bank of Japan also likely to drive the Nikkei and yen.
Asia's economic calendar is light, with only the final reading of fourth-quarter Japanese GDP on tap. A Reuters poll suggests the economy avoided a technical recession thanks to stronger-than-expected corporate spending on plants and equipment.
Inflation data from China on Saturday showed that consumer price inflation was notably higher than expected, but producer price deflation accelerated once again.
Annual consumer inflation rose to 0.7%, the highest in almost a year and a sign that the economy is reflating and the battle against deflation may be turning in policymakers' favor.
But the producer price index fell 2.7% year-on-year, more than forecast and the 17th consecutive month that prices have declined on an annual basis. Pipeline price pressures remain negative.
Deflation is one of investors' biggest concerns over China. Bubbling U.S.-Sino trade tensions is another, and on Friday Bloomberg reported that Washington is weighing sanctions on several Chinese tech companies, including chipmaker ChangXin Memory Technologies, in a bid to further restrain China's development of advanced semiconductors.
Capital has flooded out of China for some time, but analysts at the Institute of International Finance say this tide may be turning — China posted its first equity inflow in six months in February and its largest in over a year.
Trading in the Japanese yen, meanwhile, is intensifying as the BOJ's March 18 to
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