Traders in the Asia-Pacific region are facing another day of somber trading as negative sentiment returns, with a wary eye on the upcoming US inflation data.

Japan’s Nikkei 225 index rose by 2.01 points. Data revealed that average cash earnings in Japan increased by 0.2% year-on-year in November 2023, marking the 23rd consecutive month of rising wages, although this growth decelerated from a 1.5% gain in October.

China’s Shanghai Composite index fell by 0.42%. Market participants are eagerly anticipating a series of critical China economic data which includes new bank loans, consumer and producer prices, and trade balance, all of which are scheduled to be released later this week and are expected to guide the economic and policy outlook.

Investor spirits were further dampened by geopolitical tensions after China cautioned that it had no room to compromise with those advocating for Taiwan’s independence.

The Hang Seng Index in Hong Kong dropped by 0.83%, mirroring the subdued mood in the region. Meanwhile, India’s SENSEX index inched down by 0.01%, with India’s inflation data for December and industrial production for November set to be released on Friday.

The Australian ASX 200 index also experienced a decline of 0.69%, with the Australian November Consumer Price Index (CPI) coming in at 4.3% year-on-year, slightly below the expected 4.4%.

In the US on Monday, all three major indexes ended the session with mixed results as traders cautiously braced for key inflation reports and the start of the earnings season this week.

U.S. stock futures steadied on Wednesday after the major averages ended mixed in the previous session: the Dow fell by 0.15%, the S&P 500 by 0.14%, and the Nasdaq by 0.10%.

Traders are exercising caution as they await the US inflation print, which is expected to offer clues on the Federal Reserve’s next policy moves, as well as key earnings reports scheduled for this week.

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