Inflation cast its shadow over Asia’s equity markets on Wednesday as prices in the world’s top two economies, the United States and China, continued to soar.
Despite markets, particularly in the US, chalking up all-time highs in recent days and weeks, traders remain nervous about the stream of data showing global inflationary pressures are building as supply chains are snarled and demand spikes.
And central banks are now turning increasingly hawkish with some raising interest rates and others paring back vast support measures put in place at the start of the pandemic, which have been key to the rally in world equities for the past 18 months.
On Wednesday, China released a report showing the prices paid at factory gates had jumped 13.5% on-year in October to their highest level in more than two decades, owing to soaring energy prices and supplies being hit by coronavirus lockdowns. The figures also showed a further pick-up in consumer inflation.
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The readings will cause a headache for Beijing as they fight to prevent prices from running out of control but also provide support to the economy as its recovery stutters under pressure from the recent Covid flare-ups.
The news came a day after the Labor Department said US wholesale prices remained elevated last month and observers said the advances would likely continue this year. The consumer price index will be released later on Wednesday.
“Because we haven’t seen inflation for a while, people aren’t used to it,” Drew Matus of MetLife Investment Management said.
Shanghai, Tokyo, Sydney, Seoul, Singapore, Mumbai, Wellington, Manila and Jakarta were all in negative territory.
The Nikkei 225 lost 0.61%, or 178.68 points, to end at 29,106.78, while the broader Topix index slid 0.54%, or 10.81 points, to 2,007.96.
Tech Firms Rally
However, Hong Kong reversed an early sell-off to end in positive territory thanks to a rally in beaten-down tech firms, while Taipei also edged up.
The Hang Seng Index gained 0.74%, or 183.01 points, to 24,996.14. The Shanghai Composite Index eased 0.41%, or 14.54 points, to 3,492.46, while the Shenzhen Composite Index on China’s second exchange slipped 0.25%, or 6.16 points, to 2,430.08.
Investors were also keeping tabs on developments in the China Evergrande saga, with the struggling property giant facing a Wednesday deadline to pay interest on three bonds worth a total of $148 million.
The firm has fulfilled its obligations on two previous notes, and it reportedly managed to raise around $144 million last week by slashing its stake in an internet company.
However, there remains a lot of concern that the crisis at the company, which is drowning in debts worth more than $300 billion, will spill into the wider economy.
Bitcoin was sitting around $66,450, a day after hitting a new record high of $68,513.
MARKETS
Tokyo > Nikkei 225: DOWN 0.6% at 29,106.78 (close)
Hong Kong > Hang Seng Index: UP 0.7% at 24,996.14 (close)
Shanghai > Composite: DOWN 0.4% at 3,492.46 (close)
New York > Dow: DOWN 0.3% at 36,319.98 (close)
- AFP with additional editing by Sean O’Meara
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