Asian markets mostly rose on Monday as investors were encouraged by signs of slowing US inflation, but Hong Kong and Shanghai fell as data showed China’s economy was struggling with Covid-19 restrictions.
Markets were concerned that after two consecutive three-quarters-point hikes in the Federal Reserve’s borrowing costs, further hikes of a similar magnitude could stall the economic recovery.
Signs of improvement in inflation data over the past week have sparked debate over whether the Fed may be quicker to deviate from its recent stance of aggressively raising interest rates.
“We’re definitely moving in a better direction,” Kristina Hooper, Invesco’s global market strategist, told Bloomberg Television.
“It looks like we’ve passed the peak of inflation. The problem is that inflation is still very, very high.”
Wall Street ended Friday on a positive note after consumer and producer price data showed a significant slowdown in inflation.
The optimistic sentiment spilled over into Asia, with Tokyo up one percent as GDP data showed the Japanese economy was recovering after the government lifted Covid-19 restrictions on businesses.
Sydney rose 0.5 percent and Taipei rose 0.7 percent. Wellington, Manila and Kuala Lumpur also recorded increases. Seoul and Mumbai were closed for public holidays.
Hong Kong and Shanghai were among the few losers as Chinese economic data came in weaker than analysts had expected.
China unexpectedly cut interest rates as a series of data released Monday suggested the world’s second-biggest economy was struggling with virus lockdowns and a slumping real estate market.
The numbers showed that China’s industrial production and retail sales growth came in lower than expected in July. Industrial production rose 3.8 percent year-on-year but declined from 3.9 percent in June and below Bloomberg economists’ forecast of a 4.3 percent increase.
“The risk of stagflation in the global economy is increasing and the basis for a domestic recovery is not yet solid,” China’s Bureau of Statistics warned.
Beijing’s rigid adherence to a zero-Covid strategy has hampered the economic recovery as sudden lockdowns and lengthy quarantines hurt business activity and a recovery in consumption.
“July’s economic data is very alarming,” Raymond Yeung, Greater China economist at Australia & New Zealand Banking Group, told Bloomberg.
“The Covid zero policy continues to hit the service sector and dampen household consumption.”
Oil was lower in Asian trading, with WTI falling one percent to $91.20 while Brent slipped 0.9 percent to $97.25.
– Key figures at 03:15 GMT –
Tokyo – Nikkei 225: up 1.0 percent at 28,830.90 (pause)
Hong Kong – Hang Seng Index: down 0.3 percent at 20,123.33
Shanghai — Composite: down 0.1 percent at 3,273.16
Euro/Dollar: DOWN at $1.0247 from $1.0261 on Friday
Pound/dollar: DOWN at $1.2118 from $1.2135
Euro/Pound: UP at 84.56p from 84.53p
Dollar/Yen: DOWN at 133.32 from 133.50 Yen
West Texas Intermediate: FALSE, up 1.0 percent at $91.20 a barrel
North Sea Brent Crude: FALSE, up 0.9 percent at $97.25 a barrel
New York – Dow: up 1.3 percent at 33,761.05 (close)
London – FTSE 100: up 0.5 percent at 7,500.89 (close)
#Asian #markets #rising #data #China #shows #slowdown
