China Stocks Reverse Course After Slump Fueled by Deflation Concerns

After being driven down early in the day by data indicating ongoing deflationary pressures stemming from poor domestic demand, China's equities reversed direction and rose on Monday.

Growing speculation that Japan's central bank would not raise interest rates next week caused the country's markets to soar.

China's November inflation data revealed a sharper than anticipated drop in consumer prices.

The consumer price index decreased by 0.5% annually, which was faster than the 0.1% decline predicted by Reuters' panel of experts and the largest decline since November 2020.

The producer price index decreased by 3% year over year in October, below estimates of a 2.8% contraction. Additionally, it was the fastest PPI decrease since August and the 14th consecutive month of decline.

After plunging more than 1% earlier in the day, China's CSI 300 index finished 0.59% higher at 3,419.45, while Hong Kong's Hang Seng index lost 1% in the last hour of trading.

The broad-based Topix gained 1.47% to settle at 2,358.55, while Japan's Nikkei 225 finished 1.5% higher at 32,791.80.

At its monetary policy meeting next week, the Bank of Japan is expected to hike interest rates, which gave investors hope.

This week's focus will be on the United States. The Federal Reserve will likely maintain its policy rate between 5.25% and 5.5% in its monetary policy decision.

Australia's S&P/ASX 200 ended the day at a three-month high, having opened the day up 0.06% at 7,199.00.

The small cap Kosdaq was up 0.59% at 835.25, and South Korea's Kospi finished 0.3% higher at 2,525.36, having previously increased by 0.06%. The S&P 500 led the three main U.S. markets higher on Friday.

Rising to reach a record high for the year as optimism for a "soft-landing" scenario was stoked by the November employment report and statistics from the University of Michigan consumer survey, which indicated a robust economy and declining inflation.

The Nasdaq Composite gained 0.41 percent, while the S&P 500 increased by 0.45%. The Industrial Average Dow Jones increased by 0.36%.

Insights from China's CEWC and Market Dynamics Shifts

This month, China will host its annual Central Economic Work Conference (CEWC), whereby leading economists will talk about future prospects and policy initiatives for the second-largest economy in the world.

While real estate developers saw a 1.2% decline, shares in artificial intelligence and communications equipment increased 3.3% and 4.4%, respectively.

Alphabet's stock rose 5.3% after the close of business on Wall Street, which applauded the introduction of Gemini and predicted the new AI model will help close the gap with Microsoft-backed OpenAI.

Market enthusiasts lauded the development and expressed optimistic projections, foreseeing Gemini as a catalyst that could potentially narrow the gap with Microsoft-backed OpenAI. This market reaction attests to the significance of technological advancements and strategic moves in shaping the competitive landscape of the tech industry.