Fed and weak Chinese economic data weigh on Asian stock market
2023.03.09 02:22
Fed and weak Chinese economic data weigh on Asian stock market
By Kristina Sobol
Budrigannews.com – On Thursday, fears of a more hawkish Federal Reserve continued to undermine sentiment, and weaker-than-anticipated Chinese inflation data pointed to a sluggish economic recovery in the country. This caused the majority of Asian stocks to edge lower.
After data showed that consumer inflation grew significantly less than anticipated in February, the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell by 0.3 percent each. On the other hand, producer inflation worsened as spending failed to pick up after the lifting of anti-COVID measures earlier this year.
According to the data, a Chinese economic recovery is likely to take longer than anticipated this year, which is bad news for markets that are exposed to the Asian superpower. Chinese import demand remained weak, according to data on Wednesday.
On Thursday, the majority of stock markets exposed to China maintained narrow ranges. The Hang Seng in Hong Kong increased by 0.2 percent while the Taiwan Weighted index and the KOSPI in South Korea both decreased by 0.2 percent.
A notable outlier was Japan’s Nikkei 225 index, which gained 0.6% on Thursday and extended gains into the fifth session in a row amid growing expectations that the Bank of Japan will maintain its ultra-loose policy on Friday.
Data indicating that Japanese economic growth stagnated in the fourth quarter of 2022 were ignored by the Nikkei.
After Federal Reserve Chair Jerome Powell mentioned more aggressive interest rate hikes by the central bank, citing recent strength in inflation and the labor market, broad Asian markets were suffering steep losses this week.
This idea was supported by overnight data, which showed that a gauge of private sector payrolls read higher than expected for the month of February through the middle of the month.
The nonfarm payrolls data for February, which are due on Friday, is now the primary focus. Any indications of job market resilience would give the Fed more economic leeway to raise interest rates. The Wednesday release of the Fed’s Beige Book report also pointed to some economic resilience.
Through the year 2022, Asian stock markets were harmed by rising interest rates as higher yields diverted capital away from risky markets. As markets price in a Fed that is more aggressive, this trend is expected to continue throughout 2023.
India’s Clever 50 and BSE Sensex 30 files kept to a little reach on Thursday, as heavyweight innovation stocks debilitated.
Adani Enterprises Ltd. shares (NS: After GQG Partners said it was likely to invest more in the conglomerate following a $1.7 billion investment earlier this month, ADEL) gained 0.2 percent, extending a recovery into a sixth consecutive session.
