Asia stocks fall ahead of US Fed rate decision, China shares drop on weak data

Investing.com– Most Asian stocks fell on Monday ahead of the U.S. Federal Reserve interest rate decision this week, while Chinese shares declined as weaker-than-expected retail sales data raised fresh concerns about the world’s second-largest economy’s recovery pace.

The U.S. Fed is set to decide its key on Wednesday, where a 25 basis points cut is largely priced in. However, markets were cautious about the Fed’s long-term rate trajectory as inflation has remained a major concern.

Chinese shares reverse course after retail sales data

China’s  erased early gains to inch 0.1% lower, while the  index declined 0.4%. Hong Kong’s  index fell 0.8%.

Chinese grew as expected in November as recent stimulus measures from Beijing supported business activity, data showed on Monday.

However, fell short of forecasts, reflecting ongoing weakness in consumer spending despite policy support.

The soft retail numbers dampened sentiment across Asian markets, reaffirming fears of uneven recovery in China’s economy while reinforcing a cautious tone globally as markets await clarity from the Federal Reserve.

Asia stocks down ahead of Fed, BOJ meeting

Japan’s  was largely unchanged, and  inched slightly lower ahead of the Bank Japan’s  due next week.

The BOJ is expected to maintain its current interest rates this week, as officials seek more time to evaluate global risks and the outlook for wage growth in 2024. This is in contrast to earlier expectations of a hike.

Other data showed that Japan’s shrank for the sixth straight month on lackluster demand while the extended gains in December.

Shares in South Korea’s  index were largely unchanged after the country’s president Yoon Suk Yeol was impeached in a second vote by the opposition-led parliament on Saturday, over his attempt to impose martial law in the country.

South Korea’s finance ministry vowed on Sunday to continue to swiftly deploy market stabilizing measures as needed to support the economy after the impeachment.

Globally, investors were cautious ahead of the Fed meeting. The Fed is expected to lower interest rates by 25 basis points, however, sticky inflation figures released last week, have clouded the central bank’s long-term rate outlook.

Elsewhere, Australia’s  lost 0.3%, while Indonesia’s  dropped 0.9%.

India’s  indicated a slight rise at open on Monday, while Malaysia’s  index edged up 0.2%.