Asian markets mostly fell Monday after an unexpected slowdown in retail sales reinforced worries about China’s economy, with the latest batch of weak data compounding the disappointment of Beijing’s latest stimulus pledges.
The tepid start came on the year’s last full week of trading, with the focus on key monetary policy decisions by the US Federal Reserve and the Bank of Japan.
Observers are also tracking developments in Seoul after South Korean lawmakers impeached President Yoon Suk Yeol at the weekend in the wake of his short-lived declaration of martial law this month.
Hong Kong and Shanghai slipped after figures showed that Chinese retail sales grew 3.0 percent last month, much slower than October and well off the five percent forecast.
The figures highlighted the work leaders had in store as they try to kickstart consumption and reignite the world’s number two economy.
Officials unveiled new promises at the weekend to boost the battered property sector and tweak monitoring of equity markets.
That came after investors were left unimpressed last week with Beijing’s pledge to introduce measures aimed at “lifting consumption vigorously” as part of a stimulus drive.
President Xi Jinping and other key players said at the annual Central Economic Work Conference they would implement a “moderately loose” monetary policy, increase social financing and reduce interest rates “at the right time”.
Elsewhere in Asia, there were also losses in Sydney, Wellington, Manila and Jakarta, though Tokyo, Singapore and Taipei rose.
Seoul fluctuated after Saturday’s impeachment of Yoon, with South Korea’s Constitutional Court starting proceedings Monday to determine whether to uphold the vote.
While the martial law crisis shocked markets, observers said the economic impact would likely be limited, with some suggesting a stimulus package could be implemented in the new year.
The Fed is widely expected to cut interest rates again Wednesday but there are fears it will have to slow its pace of easing next year owing to sticky inflation and bets that president-elect Donald Trump’s tax cuts and tariffs will reignite prices.
The gathering comes after figures last week showed the consumer price index ticked up and wholesale prices accelerated.
Investors are now pricing a more-than-75 percent chance the Fed holds rates steady in January, according to the CME FedWatch tool.
The Bank of Japan is due to deliver its own policy decision after that, with debate swirling on whether officials will announce a third hike of the year, having moved in March for the first time since 2007 as price pressures continue to build.
“The Bank of Japan will likely tighten monetary policy on Thursday,” said economists at Moody’s Analytics, pointing to a 25 basis-point lift.
“The central bank is worried that yen weakness might spur inflation, hurting real wages and consumer spending.”
But Tony Sycamore, an analyst at the IG trading group, said expectations were for officials to hold rates at 0.25 percent.
However, he added that “the central bank’s current inaction is unlikely to persist, with any rate hold expected to come with strong forward guidance signalling a potential January hike”.
“Broadening underlying pricing pressures, such as service prices, continue to point towards a more persistent inflationary trend. This environment suggests conditions are ripe for another rate hike, reinforcing expectations for tighter policy down the line.”
On currency markets, the dollar rose against the yen Monday.
– Key figures around 0230 GMT –
Tokyo – Nikkei 225: UP 0.2 percent at 39,533.55 (break)
Hong Kong – Hang Seng Index: DOWN 0.4 percent at 19,888.97
Shanghai – Composite: DOWN 0.1 percent at 3,388.34
Euro/dollar: UP at $1.0515 from $1.0504 on Friday
Pound/dollar: UP at $1.2634 from $1.2622
Dollar/yen: UP at 153.96 yen from 153.60 yen
Euro/pound: UP at 83.31 pence from 83.19 pence
West Texas Intermediate: DOWN 0.4 percent at $71.03 per barrel
Brent North Sea Crude: DOWN 0.3 percent at $74.30 per barrel
New York – Dow: DOWN 0.2 percent at 43,828.06 (close)
London – FTSE 100: DOWN 0.1 percent at 8,300.33 (close)
dan/pbt
