HONG KONG, Nov 9 — Asian stocks made a positive start today following gains on Wall Street, but lost momentum as factory gate prices in China fell for the first time in nearly two years.
Shares in Tokyo, Hong Kong and Shanghai edged up at the open as votes were counted in crucial US midterm elections that will shape the political fortunes of President Joe Biden.
But they closed lower after official data from China showed the world’s second-largest economy languishing under its strict zero-Covid policy.
Markets had climbed in New York and Europe yesterday, with Biden’s Democrats facing a struggle to hang on to control of Congress, and polls predicting a Republican victory that could pave the way for a White House comeback bid by Donald Trump.
That predicted Republican wave failed to materialise in elections fought against a backdrop of stubbornly high inflation, however.
By Wednesday afternoon in Asia, all eyes were on a handful of Senate races, including swing state Pennsylvania, where a win for the Democrats boosted the party’s chances of retaining their razor-thin majority in the upper chamber.
Investors were also awaiting key US inflation data due tomorrow, causing the dollar to retreat along with the midterms as investors’ risk appetite increases, analysts said.
Tokyo ended down 0.6 per cent and Shanghai closed 0.5 per cent lower, while Hong Kong stocks lost 1.2 per cent.
Other Asian markets were mostly higher, with Taipei jumping 2.2 per cent, Seoul gaining 1.1 per cent and Singapore up 0.7 per cent. Sydney rose 0.6 per cent, but Bangkok lost 0.6 per cent.
‘No good news from China’
Speculation over how long Beijing will keep its harsh lockdown-and-testing Covid-19 policies has fuelled volatility in Chinese markets, despite the government vowing it will not change course.
The restrictions have taken a toll on the economy. China’s producer price index (PPI) fell by 1.3 per cent on-year in October, pushing it into negative territory for the first time since December 2020.
The consumer price index (CPI) — the main gauge for retail inflation — rose by 2.1 per cent on-year in October, moderating slightly from September’s two-year high of 2.8 per cent.
“The economy’s slowing is confirmed by the CPI data,” Iris Pang, chief economist for Greater China at ING Wholesale Banking, told AFP. “I don’t see any good news from China.”
Stephen Innes of SPI Asset Management agreed that the Chinese data painted “a rather gloomy picture, with PPI remaining deflationary and CPI much weaker than expected, pointing to waning demand”.
Oil prices were driven lower during the day, but recovered in the afternoon.
“Rolling lockdowns in China, as Covid cases rebound, are catching oil traders leaning the wrong way,” Innes said.
The lacklustre mood was also seen in early European trade, with London losing 0.3 per cent in early trade, Frankfurt down 0.2 per cent, and Paris flat. — AFP
