Most Asian stocks fell on Thursday, extending recent losses as signs of sticky U.S. inflation fueled uncertainty over future interest rate cuts, while investors held out for more stimulus measures in China.
Regional markets took middling cues from Wall Street as a risk-on rally, following Donald Trump’s election victory last week, now appeared to be petering out. U.S. stock index futures steadied in Asian trade, after Wall Street retreated from record highs over the past two sessions.
U.S. consumer price index inflation data read in line with expectations for October, but still showed inflation remained sticky.
While the reading still spurred bets on a December interest rate cut by the Federal Reserve, the longer-term rate outlook grew more uncertain, especially in the face of potentially inflationary policies under Trump.
Markets were now awaiting an address by Fed Chair Jerome Powell for more cues on monetary policy. The Fed had cut rates by 25 basis points last week, and reiterated its data-driven approach to future easing.
China stocks drift lower with more stimulus awaited
China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.2% each, while Hong Kong’s Hang Seng index lost 0.8% on Thursday.
Positive earnings from internet giant Tencent Holdings Ltd (HK:0700) did little to lift Hong Kong stocks, although Tencent still rose more than 1%.
Local markets were nursing some losses after Beijing’s latest round of fiscal measures largely underwhelmed, with investors holding out for more targeted measures aimed at supporting private spending and the property market.
The People’s Bank of China is expected to decide on its loan prime rate next week, although analysts were uncertain over further cuts, after the PBOC cut rates by more than expected in October.
Beijing is expected to outline more stimulus measures during two key political meetings in December. Analysts said China was also waiting to gauge the impact of a Trump presidency on the country before unlocking more stimulus.
Trump has vowed to impose steep import tariffs on the country, heralding more economic headwinds.
Australian stocks rise as RBA’s Bullock says rates to remain steady
Australia’s ASX 200 rose 0.3% after Reserve Bank of Australia Governor Michele Bullock said that monetary policy was sufficiently restrictive, and will remain at current levels until the bank was confident inflation was easing.
Bullock said that uncertainty over the U.S. economic outlook would keep the RBA cautious, while also flagging the risk of inflationary policies under Trump.
Bullock’s comments came as labor data showed growth in Australia’s job market cooled in October after six straight months of strong increases. A cooling labor market also dampens the inflation outlook.
Broader Asian markets mostly drifted lower, struggling for direction amid uncertainty over the U.S. economic outlook and the Trump presidency. Japan’s Nikkei 225 index fell 0.6%, while the TOPIX was mildly positive.
South Korea’s KOSPI added 0.4%, while futures for India’s Nifty 50 index pointed to a weak open, after the index tumbled for a fifth straight session, marking a 10% decline from record highs hit in September.
Recent weakness in Indian stocks was spurred by concerns over high inflation, while foreign investors also largely exited local markets after strong gains earlier in the year.
Source: Investing