Asian stocks sink amid China headwinds; earnings, US CPI awaited

Investing.com– Most Asian stocks retreated on Monday, with Chinese markets leading declines on middling inflation readings for April, while investors turned cautious ahead of key U.S. inflation data this week. 

Chinese stocks were also pressured by the prospect of more U.S. trade tariffs against the country. A string of reports last week said that the Biden administration was preparing to impose import tariffs on several key sectors including electric vehicles and solar energy technology.

Regional markets took middling cues from a muted Friday close on Wall Street, while U.S. stock index futures moved little in Asian trade on Monday, with focus squarely on upcoming inflation data that is likely to factor into U.S. interest rates. 

Chinese stocks sink on mixed inflation, trade jitters 

China’s and indexes fell 0.7% and 0.6%, respectively, on Monday. The two were the worst performers in Asia, and also retreated further from seven and eight-month highs hit last week.

Data over the weekend showed Chinese inflation picked up pace in April, signaling some strength in spending. But this was largely offset by Chinese inflation shrinking for a 19th consecutive month. 

Sentiment towards China was also battered by reports of more potential U.S. trade tariffs against the country, which could potentially stymie economic growth and also spark a renewed trade war with Washington. 

The reports had sparked losses in Chinese EV stocks listed in Hong Kong. The sector saw extended selling on Monday, pulling Hong Kong’s index down 0.2%.

Focus this week is also on Chinese and data, due on Friday. 

Broader Asian markets traded lower on Monday. Japan’s index shed 0.1%, while the broader lost 0.3%/ 

Australia’s shed 0.1%, while South Korea’s fell 0.2%. 

Futures for India’s index pointed to a muted open, as local markets faced increased volatility amid the 2024 general elections.

Major Asian earnings on tap this week 

Regional markets were also bracing for earnings reports from several key companies this week.

In Japan, technology giant SoftBank Group Corp. (TYO:) is set to report earnings later in the day, while majors Sony Corp (TYO:), SMC Corp (TYO:), Resona Holdings, Inc. (TYO:) and Asahi Group Holdings, Ltd. (TYO:) are due on Tuesday.

China’s biggest technology companies- consisting of Baidu Inc (NASDAQ:) (HK:), Alibaba Group Holding Ltd (HK:) (NYSE:) and Tencent Holdings Ltd (HK:), are set to report earnings through the week.

In India, earnings reports from Hindustan Aeronautics Ltd (NS:), Tata Steel Ltd (NS:) and Zomato Ltd (NS:) are due this week.