Asian stocks ended the week on the back foot after Beijing’s latest stimulus measures failed to convince and with US inflation coming in steady, and falling to spring any surprises.
Headline US CPI was 0.2% last month, the same as a month earlier, and the details were encouraging – with core goods inflation slowing down and only rents proving stubbornly sticky.
But a few hours later San Francisco Fed President Mary Daly told Yahoo Finance that while this was welcome, there “is still more work to do” for policymakers.
Also on AF: Biden Likens China to ‘Ticking Time Bomb’ Due to Economic Woes
That caution dampened the mood across the region’s trading floors, as did the latest lacklustre promises of support for China’s stumbling recovery.
Mainland Chinese stocks fell, amid fresh data showing that the post-pandemic recovery is continuing to lose steam.
It comes as China’s top leaders pledged last month to step up policy support for the economy amid a tortuous post-Covid recovery, but so far investors say the measures have not been concrete enough.
The Shanghai Composite Index dropped 2.01%, or 65.31 points, to 3,189.25, while the Shenzhen Composite Index on China’s second exchange was down 1.92%, or 39.12 points, to 2,002.29.
Hong Kong-listed shares of Alibaba Group rose 2.4% after the Chinese e-commerce giant reported its strongest quarterly revenue growth in almost two years.
The Hang Seng Tech Index, however, lost 0.90%, or 173.07 points, to close at 19,075.19, while the Hang Seng China Enterprises Index declined 1.33%.
Shares of China’s largest private property developer Country Garden plunged to a record low in the session, after it forecast a first-half loss of up to $7.6 billion and a media report said it was preparing for a debt restructuring.
Elsewhere across the region, in earlier trade, Sydney, Singapore, Mumbai, Manila and Jakarta also fell, though Seoul, Wellington and Taipei eked out gains. Tokyo was closed for a public holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7% with stocks in Hong Kong and China the biggest drag. It was down 1.6% for the week.
Yen Falls to Six-Week Low
Soft demand at a 30-year Treasury auction and a blowout in the US budget deficit weighed on bonds, and their higher yields in turn lent the dollar a leg up – particularly against a yen pinned by yield control in Japan.
The yen touched a six-week low of 144.89 per dollar in early trade, though volumes were thinned owing to the holiday in Japan. Its stock markets were closed and Treasuries went untraded in the Asia session.
US stock futures were flat and European futures fell 0.5%.
Benchmark 10-year Treasuries initially rallied on the inflation headlines, but yields were seven basis points higher at 4.11% by the close of trade in New York. Two-year yields rose two bps to 4.82%.
In commodity markets, European gas prices have been jumpy on the prospect a labour dispute at Australian fields supplying 10% of the world’s liquefied natural gas could disrupt production.
Brent crude futures looked to end the week steady at $86.27 a barrel. British growth figures and US consumer confidence data are due later on Friday.
Key figures
Tokyo – Nikkei 225 <> CLOSED
Hong Kong – Hang Seng Index < DOWN 0.90% at 19,075.19 (close)
Shanghai – Composite < DOWN 2.01% at 3,189.25 (close)
London – FTSE 100 < DOWN 0.94% at 7,546.86 (0930 BST)
New York – Dow > UP 0.15% at 35,176.15 (Thursday close)
- Reuters with additional editing by Sean O’Meara
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