Asian markets were in retreat on Wednesday as fears over US inflation and rate hikes weighed on sentiment.
Japan’s markets were dragged down by chip-related shares while Hong Kong stocks dropped by their most in a week, pulled down by the property sector, and China stocks edged back over worries about falling domestic demand.
Tokyo’s Nikkei fell after a dismal forecast from Micron Technology led US tech heavyweights lower overnight, while investors awaited US inflation data later on Wednesday that could influence the Federal Reserve’s tightening path.
The Nikkei share average closed 0.65% lower at 27,819.33, while the broader Topix edged 0.17% lower to 1,933.65. Chip-making equipment maker Tokyo Electron fell 2.75% and chip-testing equipment maker Advantest lost 3.8%.
“The market responded to stocks with positive earnings,” said Maki Sawada, a strategist at Nomura Securities.
Mainland China equities slipped as slower-than-expected inflation reignited market concerns over weak domestic demand.
China’s July factory-gate inflation eased to a 17-month low, defying global cost pressures as slower domestic construction weighed on raw material demand, although consumer prices picked up pace, driven mostly by tight pork supplies.
“The COVID outbreaks in many cities and the lack of further policy stimulus may have led to weaker growth in July,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
The Shanghai Composite Index dipped 0.54%, or 17.41 points, to 3,230.02, while the Shenzhen Composite Index on China’s second exchange dropped 0.35%, or 7.66 points, to 2,180.83.
Hong Kong stocks plunged, off the back of more bad news for the property sector.
That came after UBS downgraded major developers Country Garden, Longfor Group, as well as property management companies Country Garden Services and Jinke Smart Services, to “neutral” from “buy”.
An index tracking Chinese developers listed in Hong Kong fell 5.14% and the benchmark Hang Seng Index tumbled 1.96% to 19,610.84 in its biggest daily drop since August 2.
Elsewhere across the region, most stock markets in the region fell on subdued investor sentiment, with Indonesia, South Korea and Taiwan falling up to 0.9%.
Malaysia fell about 0.4% ahead of its second-quarter economic growth data on Friday while Singapore stocks gained about 0.3%.
Indian stocks gained with Mumbai’s signature Nifty 50 index up 0.04%, or 7.10 points, at 17,532.20.
Globally, stocks trembled while major currencies held steady as investors were reluctant to place bets ahead of Wednesday’s release of US inflation data.
The Consumer Price Index (CPI) report will be released at 1230 GMT, with markets watching for signs that inflation eased in July despite last week’s unexpectedly strong US jobs numbers.
The market is pricing in a 69.5% chance of a 75 bps rate increase at the Fed’s next meeting. Economists polled by Reuters expect the CPI to show year-on-year headline inflation of 8.7%, far above the Fed’s target of 2% but down from last month’s red-hot 9.1%.
Europe’s benchmark STOXX index fell 0.43%, following a bigger fall of 1.2% in the MSCI’s broadest index of Asia-Pacific shares outside Japan.
“I don’t think that we are through the bear market woods yet – recession risks loom and I don’t think the Fed is done with its aggressive belt tightening,” said David Chao, a global market strategist for Asia Pacific ex-Japan at Invesco.
US markets looked set to open broadly flat, with S&P 500 futures down 0.06%.
The dollar was steady, having paused from a retreat that began in the middle of July. The dollar index, which measures the safe-haven greenback against six major peers, was at 106.3.
Oil prices fell after industry data showed US crude inventories unexpectedly rose last week, signalling a possible hiccup in demand. Brent crude futures fell 61 cents to $95.73 a barrel, while US West Texas Intermediate (WTI) crude was down 70 cents to $89.82.
The cryptocurrency bitcoin, which often tracks tech stocks, was down 0.76% at $22,974.
Tokyo – Nikkei 225 < DOWN 0.65% at 27,819.33 (close)
Hong Kong – Hang Seng Index < DOWN 1.96% at 19,610.84 (close)
Shanghai – Composite < DOWN 0.54% at 3,230.02 (close)
New York – Dow < DOWN 0.18% at 32,774.41 (Tuesday close)
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