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Asian Stocks Down, Inflation Remains “Major Headwind”

Stock MarketsNov 07, 2021 09:21PM ET
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By Gina Lee – Asia Pacific stocks were mostly down on Monday morning after China released its latest trade data. Investors also continue to monitor the impact of inflation on both monetary policy and the pace of economic recovery.

China’s Shanghai Composite edged up 0.14% by 10:14 PM ET (2:14 AM GMT) while the Shenzhen Component inched down 0.10%. Data released on Sunday showed that exports grew 27.1% year-on-year in October, while imports grew 20.6% year-on-year and the trade balance stood at $84.54 billion.

Further data, including the consumer and producer price indexes, are due on Wednesday.

The Chinese Communist Party’s Central Committee will start its meeting, its first in more than a year, on Monday. The meeting will run to Nov. 11.

Hong Kong’s Hang Seng Index fell 0.47%.

Japan’s Nikkei 225 edged down 0.19% and South Korea’s KOSPI slid 1.12%. In Australia, the ASX 200 was down 0.22%.

U.S. Treasury 10-year yields fell below 1.5%, which contributed to a rally in Australian bonds.

Data from the latest U.S. job report, released on Friday, showed that non-farm payrolls increased by a better-than-expected 531,000, and the unemployment rate fell to 4.6%, in October.

“The strong jobs report is a welcome sign that the COVID Delta wave-driven slowdown was indeed transitory. This bodes well for the expansion, which is set to continue in the coming months, driving earnings and economically sensitive sectors higher,” Janus Henderson Investors director of research Matt Peron told Bloomberg.

U.S. President Joe Biden said Friday that the U.S. economy is recovering from the pandemic faster and stronger than expected. However, Fed Bank of Kansas City President Esther George warned that bottlenecks contributing to high inflation will persist well into 2022 amid broadening price pressures.

George’s comments indicated that the debate about inflation continues to cast a shadow over markets.

“Inflation is the major headwind right now. There is a disconnect at this point between some of the expectations that we have about inflation and what consumers are feeling on the ground,” Envestnet (NYSE:ENV) co-chief investment officer Dana D’Auria told Bloomberg.

On the COVID-19 front, encouraging results from a study for Paxlovid, Pfizer Inc.'s (NYSE:PFE) Covid-19 pill, also gave stocks a small boost. Pfizer CEO Albert Bourla told Bloomberg that the company is aiming to submit the results for Paxlovid to U.S. regulators by Nov. 25.

Asian Stocks Down, Inflation Remains “Major Headwind”

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