Asian stocks mixed, China extends losses as economic woes deepen

By Ambar Warrick– Asian stocks saw choppy trading on Wednesday as investors awaited U.S. midterm election results for more clues about the world’s largest economy, while Chinese stocks fell further on weaker economic data.

China’s blue-chip Shanghai Shenzhen CSI 300 index fell 0.9%, while the Shanghai Composite Index fell 0.5% after data showed the country inflation at the factory gate decreased for the first time in a year. Consumer inflation also grew less than expected as COVID-19 lockdowns crippled local economic activity.

The dismal data served to sour sentiment towards Chinese markets, amid waning hopes the country will ease its tough COVID-19 rules.

China is grappling with its worst COVID outbreak since May, which saw the reintroduction of movement restrictions in several economic hubs. It has also significantly soured investors on the country, with local markets now reversing much of the gains made over the past week.

Hong Kong stocks were also hit hard by deteriorating sentiment towards China, with the Hang Seng index losing 1.5%.

But Chinese real estate stocks were the only bright spot. Property developers including Country Garden Holdings Company Ltd (HK:2007), Gemdale Corp (SS:600383) and Beijing Capital Co Ltd (SS:600008) jumped 6%-15% as the government extended a funding program supporting increases in debt in the troubled sector.

Other Asian markets were mixed. Tech-focused stock markets continued to benefit from expectations of a lower US interest rate hike. Taiwan’s weighted index jumped 2%, while South Korea’s KOSPI index rose 0.8%.

India’s blue-chip Nifty 50 index lost 0.1%, while Australia’s S&P/ASX 200 index rose 0.6%.

WE CPI inflation Thursday’s data should shed more light on the trajectory of U.S. interest rates, as the Fed signaled it would continue raising interest rates until inflation is brought into line.

But given that the central bank has also signaled that interest rates will likely peak at higher levels than initially expected, Asian markets are likely to remain under pressure.

Investors were also awaiting the results of the US midterm elections, with an early tally indicating a tight race. Such an outcome would likely result in a political stalemate for the United States, implying no major shifts in fiscal policy.

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