By Gina Lee
Investing.com – Asia Pacific stocks were up on Wednesday morning, boosted by continued optimism for a global economic recovery from COVID-19. However, gains were capped by growing worries about the sustainability of a recent risk rally.
China’s Shanghai Composite gained 0.76% by 10:04 PM ET (3:04 AM GMT) and the Shenzhen Component rose 1.12%. Investors digested data released earlier in the day showing that the Consumer Price Index (CPI) grew 1% month-on-month but fell 0.3% year-on-year and that the Producer Price Index (PPI) grew 0.3% year-on-year in January.
Hong Kong’s Hang Seng Index jumped 1.44%. Changes that were reportedly made in Tencent Holdings (OTC:TCEHY) Ltd.'s (HK:0700) gaming business boosted investor sentiment and drove stocks in the city upwards.
Japan’s Nikkei 225 inched up 0.02% and South Korea’s KOSPI edged up 0.20%.
In Australia, the ASX 200 was up 0.70%.
Global stocks look set to reach another record high as COVID-19 vaccines are rolled out, the prospect of further U.S. stimulus measures rises, and the number of global COVID-19 cases starts to decline.
However, investors are starting to reconsider how much government stimulus spending, easy money from central banks and inoculations against COVID-19 will boost stocks, oil and inflation. This led them to hit pause on a global markets rally on Tuesday.
Some investors dismissed these worries.
“Substantial inflation worries are potentially overblown,” Axi chief global markets strategist Stephen said in a note.
However, other investors struck a more cautious note.
“A pullback here could give tactical opportunities to those who were looking to get involved … it seems like right now the story is just getting started, and the momentum is building behind it, and that story includes the reopening, vaccines, the downward trend now in some of the virus cases we’ve been seeing, supported by the stimulus talks and the Federal Reserve still on the side lines,” Allianz (DE:ALVG) Global Investors investment strategist Mona Mahajan told Bloomberg.
Meanwhile, Fed Chairman Jerome Powell will speak on a webinar later in the day. On the data front, the U.S. will also release its CPI later in the day.