Inflation concerns drive Asia-Pacific markets lower

Most Asia-Pacific markets tracked overnight losses on Wall Street to trade lower on Wednesday dragged by concerns on rising global inflation.

On Wednesday, the South Korean benchmark index KOSPI led losses in the region, dropping over 1%. Japan’s Nikkei 225 index lost 0.6% and Australia’s S&P/ASX 200 index slipped 0.1%.

Investors grew wary of rising fuel prices as international oil price benchmark Brent futures extended gains to hit a two-week low of $85.48 on Wednesday.

Nomura cuts China 2022 GDP growth forecast

Data from Asia’s largest economy, China, showed that factory-gate inflation in the country hit a 26-year high in October due to the ongoing power shortage.

Nomura cut its 2022 annual gross domestic product growth forecast for China to 4.3% from 4.8% in its latest report citing weak export growth, property sector downturn, recurring Covid-19 waves and Beijing’s zero-Covid strategy.

“Despite an alleviated energy shortage and fine-tuning of property curbs, we believe economic conditions are likely to further deteriorate as the pain threshold seems yet to be reached for Beijing to take real actions. Markets may still underestimate the upcoming pain likely ahead for both the economy and financial markets,” Ting Lu and Jing Wang of Nomura said.

Hong Kong reverses losses

Hong Kong’s Hang Seng index erased losses of over 1% to trade 0.7% higher by Wednesday afternoon as beaten-down property stocks staged a rebound.

Hang Seng Mainland Properties Index jumped 7.8% with China Resources Land and Country Garden Holdings emerging as top gainer, up 9% and 7.9%, respectively.

Property developer Fantasia Holdings, however, dropped about 40% on Wednesday after coming out of a month-long trading halt. The company had missed debt payment deadlines in early October.

South Korea shares hits near one-month low

Neighbour South Korea’s KOSPI index closed at a near one-month low on Wednesday with battery maker LG Chem losing 3.9% and carmaker Hyundai Motor shedding 2.1%.

Across the East China Sea, Japan shares closed lower as the steel, wholesale trade and logistics sectors emerged as the biggest drags.

Elsewhere, Australian shares extended losses to a third straight day dragged by mining stocks on weak base metals and iron ore prices. Aussie gold stocks bucked the trend to edge higher on the bullion’s status as an inflation hedge.

US CPI data in focus

In Southeast Asia, Singapore’s Straits Times index fell about 0.6% to 3,225.28 and the Philippines’ PSEI index lost 0.9% to 7,375.68 on Wednesday. Bourses in Kuala Lumpur and Jakarta were in the red.

Markets now await consumer price inflation data from the US due later today with policymakers expected to come under increasing pressure to raise ultra-low interest rates if inflation runs longer than expected.

“The US CPI release is the focal point of today. The consensus sees headline inflation rising to 5.9% year-on-year, and our economists think it is not the end of rising price pressures,” ING said in a note.

Read more : China’s factory-gate inflation at 26-year high