Asian stocks fell on Wednesday, tracking Wall Street’s retreat, with Chinese indices outpacing declines after the government reported a spike in October inflation.
China’s CPI, the main indicator of inflation, rose 1.5% in October, up from 0.7% a month earlier, the National Bureau of Statistics said. The rise to a 13-month high was driven mainly by a jump in food and fuel prices, the report said.
Producer prices, or wholesale prices, rose 13.5%, fueling fears that price pressures could limit the central bank’s ability to adjust its policies to support growth. The Hong Kong Hang Seng fell 1% to 24,575.71, while the Shanghai Composite Index lost 0.8% to 3,479.31.
But the latest numbers have been exaggerated due to low comparative data over the past year, and underlying price pressures remain low, according to a report by Julian Evans-Pritchard of Capital Economics.
“We continue to believe that consumer price inflation will remain below 2% in the coming quarters and that inflation is unlikely to be a major constraint on the NBK’s ability to loosen monetary policy,” he said.
Elsewhere in Asia, Tokyo’s Nikkei 225 shed 0.6% to 29,106.78, while South Korea’s Kospi fell 1.1% to 2,929.81. Australia’s S & P / ASX 200 fell 0.1% to 7,423.90.
On Tuesday, Wall Street stocks closed moderately lower, ending an eight-day winning streak, supported by strong corporate earnings and economic data.
The S&P 500 lost 0.4% to 4685.25. The last time the S&P 500 rose in eight straight days was in April 2019. The Dow Jones Industrial Average fell 0.3% to close at 36,319.98, while the Nasdaq shed 0.6% to 15,886.54.
Tesla lost 12% after its founder, Elon Musk, said he would sell 10% of its electric car maker, based on a poll he conducted on Twitter. The company’s shares are down more than 16% this week and 45% this year.
Meanwhile, PayPal – the company Musk co-founded more than two decades ago – fell 11% after the company cut its annual and earnings forecasts amid growing competition from other financial technology companies such as Square, Affirm and even traditional banks.
Robinhood fell 3.4% after a popular trading app reported a data breach the day before.
The decline in bond yields led to a decline in the prices of bank shares. Lenders rely on higher yields to charge more lucrative interest. The 10-year Treasury yield fell to 1.44% from 1.49% on Monday night.
Inflation is also weighing on US markets: on Tuesday, the Labor Department said wholesale inflation rose 8.6% in October from a year earlier, in line with a record annual gain in September.
Many industries are facing higher raw material and energy costs while grappling with supply chain challenges. This limited their activities and encouraged them to raise the prices of finished products, which in turn made products and services more expensive for consumers.
On Wednesday, the Labor Department is to release its October CPI, which will provide a more detailed picture of how inflation affects consumers.
The latest round of earnings is nearing completion, but investors have yet to examine several large corporate report cards. Walt Disney will report its findings on Wednesday. Tapestry, owner of Coach and other luxury brands, will report its results on Thursday.
US benchmark crude rose 23 cents to $ 84.38 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $ 2.22 on Tuesday. Brent crude, the basis for international prices, added 47 cents to $ 85.25 a barrel.
The US dollar rose to 112.90 Japanese yen from 112.86 yen. The euro fell to $ 1.1579 from $ 1.1595.