Asian Markets Weaken as Investors Brace for Key Inflation Data
Asian share markets experienced a weakening trend as investors prepared for the release of crucial inflation data from China and the United States later in the week. Weaker than expected Chinese trade data contributed to the downward pressure. China’s imports contracted at 12.4% in July, falling short of forecasts for a 5% drop, while exports also fell 14.5%, compared to an expected 12.5% decline.
As a result, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.7% while Hong Kong’s Hang Seng Index was down 1.26%. However, Australian shares managed to edge up by 0.15% and Japan’s Nikkei stock index saw a modest increase of 0.29%.
There is keen anticipation for the inflation readings from China and the U.S., which are expected to highlight significant differences in price movements between the world’s two largest economies. According to a Reuters poll of economists, U.S. inflation likely accelerated slightly in July to an annual rate of 3.3%, while the core rate was expected to remain unchanged at 4.8%. ANZ economists predict China’s July consumer price index to show a year-on-year decrease of 0.4%.
Investors are closely monitoring China’s economic growth and the potential for government stimulus measures to reinvigorate the weakened economy. While minor measures have been implemented to support property markets, a comprehensive stimulus plan has not yet been outlined.
The offshore yuan and the Aussie dollar weakened against the U.S. dollar, with the off-shore yuan hitting a more than two-week low and the Aussie dollar declining 0.38%. Meanwhile, the dollar gained 0.46% against the yen but remained below its year-high level reached in June.
In other markets, U.S. stock futures saw a 0.21% decline, and the yield on benchmark 10-year Treasury notes rose slightly. U.S. crude oil prices ticked up 0.21% to $82.11 per barrel, while Brent crude rose to $85.46 per barrel. Gold prices remained relatively stable.
Investors will continue to closely monitor the inflation data and its potential impact on global markets. The outcome of these reports will play a significant role in shaping future investment decisions, particularly regarding expectations for economic growth and stimulus measures.
