Asian shares mixed as China reports jump in inflation

Asian shares were mixed on Wednesday after China reported a big jump in factory gate prices at a time when inflation is a top investor concern.

Shares fell in Tokyo, Seoul, Sydney and Hong Kong but rose in Shanghai

China's producer price index, which measures prices of raw goods and services, jumped 9% from a year earlier in May, the fastest increase since 2008, during the global financial crisis, and above analysts' forecasts, the government said.

However, the headline consumer price index rose a more modest 1.3%, lower than expected. Inflation in the first five months of the year averaged 0.4%.

Surging prices for oil and other commodities and manufacturing components such as semiconductors were the main factor behind the jump in producer prices, Julian Evans-Pritchard of Capital Economics said in a commentary. He noted prices of electronics products, in strong demand during the pandemic, have eased.

“This adds to signs from the latest trade data that global demand for Chinese consumer goods may be starting to drop back as distortions to spending patterns caused by the pandemic reverse," he said.

For now, the Chinese government appears to be focusing on resolving supply side constraints driving higher prices and less worried about a potential spiral in prices due to surging consumer demand, economists say.

Investors are more concerned with U.S. inflation data out Thursday and what it might augur for interest rates and other market-supporting policies.

Tokyo's Nikkei 225 index fell 0.4% to 28,860.80 and the Kospi in Seoul also fell 0.9% to 3,219.13. Hong Kong shed 0.3% to 28,704.18 while the S&P/ASX 200 in Sydney edged 0.2% lower to 7,277.30. The Shanghai Composite index advanced 0.2%, to 3,585.84.

Shares opened higher in India and Jakarta but fell in Singapore...