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Asian Stocks Down, Continues Downward Trend as Inflation Persists

Stock MarketsOct 05, 2021 10:17PM ET
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By Gina Lee – Asia Pacific stocks were down on Wednesday morning, as soaring inflation due to increasing energy costs continue to dampen investor sentiment about the economic recovery from COVID-19.

Japan’s Nikkei 225 fell 0.93% by 10:05 PM ET (2:05 AM GMT). South Korea’s KOSPI fell 0.85%, with data released earlier in the day showing that the consumer price index grew 2.5% year-on-year in September.

In Australia, the ASX 200 was down 0.43%. Hong Kong’s Hang Seng Index slid 1.22%, with the city's chief executive Carrie Lam handing down her annual policy address later in the day.

Chinese markets were closed for a holiday. However, worries about China’s property sector continued as regulatory tightening continues. The impact on investor sentiment was demonstrated on Tuesday when representatives of Man Group, Soros Fund Management, and Elliott Management raised concerns about the outlook for Chinese stocks.

Data released on Tuesday showed that the U.S. services purchasing managers index (PMI) was 54.9 for September, while the Institute of Supply Management (ISM) non-manufacturing PMI was 61.9. The higher-than-expected data, alongside the inflation risks from spiraling costs for crude oil and natural gas, are adding to the case for the U.S. Federal Reserve to begin asset tapering.

Volatility has increased in global markets as investors prepare for a slower but still strong economic recovery, and other central banks also signal preparations to begin asset tapering.

The Reserve Bank of New Zealand hiked its interest rate to 0.50% from the previous month’s 0.25% as it handed down its policy decision earlier in the day, with the Reserve Bank of India will hand down its decision on Friday. The latest U.S. jobs report, including non-farm payrolls, will also be released on the same day.

The ongoing debate in the U.S. Congress over the nation’s debt ceiling and President Joe Biden’s economic agenda is also contributing to market uncertainty.

“For the last five or six months we’ve entered a period of kind of a mini-cycle in the U.S. where you’ve got a changing Fed regime, and we are at the extended end of a recovery,” Union Bancaire Privee Head of Equity Research for Asia Kieran Calder told Bloomberg.

“It leaves the market vulnerable to external shocks and increased volatility.”

Asian Stocks Down, Continues Downward Trend as Inflation Persists

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Frank Osei
Frank Osei Oct 05, 2021 11:02PM ET
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