Asian Stocks Fall as Chinese Economic Data Disappoints
Hong Kong, Aug 16 – Asian stocks stumbled on Wednesday as disappointing economic data from China and the lack of substantial stimulus from Beijing continued to weigh on investor sentiment.
China’s new home prices fell for the first time this year in July, indicating a rapid loss in economic momentum and the need for bolder policy support. This followed weaker than expected July activity data and the news that Beijing would no longer publish youth unemployment data, which further rattled confidence in the Chinese economy.
The People’s Bank of China (PBOC) unexpectedly lowered its policy rate on Tuesday, but many investors believe it is not doing enough to reduce interest rates and stimulate consumer activity.
“The sentiment towards China among investors is pretty bad,” said Redmond Wong, a market strategist at Saxo Markets. Wong expressed concern about the decline in China’s retail sales and weak infrastructure investments, which suggest a lack of local government funding.
China and Hong Kong stocks extended their declines, with the Hang Seng Index down as much as 1.39% and China’s blue-chip CSI 300 Index 0.45% lower.
Other major Asian markets also experienced losses, with Japan’s Nikkei 225 index slipping 1.3% to a two-month low and Australia’s S&P/ASX 200 index falling nearly 1.5%, its biggest drop in about six weeks.
Investors are now looking for clues from major economies, with Britain’s inflation data and Federal Reserve minutes set to be released later in the day. The euro zone is also expected to announce preliminary second-quarter gross domestic product figures, which are estimated to show meager growth and a decline in industrial production.
Analysts at Commonwealth Bank of Australia (CBA) expect the Bank of England to continue increasing rates to curb high core inflation, even if it leads to a recession.
“All three major U.S. equity indexes ended lower on Tuesday after stronger-than-expected U.S. retail sales data,” said Tina Teng, a markets analyst at CMC Markets APAC & Canada. The data increased the likelihood of the Fed keeping rates high for longer, strengthening the U.S. dollar and putting pressure on riskier currencies like the Australian and New Zealand dollars.
U.S. crude and Brent crude both fell, with U.S. crude down 0.36% and Brent down 0.35%. Spot gold, however, was up 0.14%.
Investors continue to monitor the latest developments in global markets as economic uncertainties persist.
Reporting by Kane Wu; Editing by Lincoln Feast and Sam Holmes
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