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Investing.com – Asia Pacific stocks were mostly down on Wednesday morning, with investors digesting inflation data from China that indicated a build-up of inflationary pressure in the global economy. They now await further data from the U.S.
China’s Shanghai Composite slid 1.18% by 9:23 PM ET (2:23 AM GMT) while the Shenzhen Component was down 0.61%. Data released earlier in the day showed that the consumer price index (CPI) grew 0.7% month-on-month and 1.5% year-on-year in October. The producer price index (PPI) grew by 13.5% year-on-year.
The Chinese Communist Party’s Central Committee is also continuing its meeting, which runs to Nov. 11. The meeting is expected to pave the way for an unprecedented third term for President Xi Jinping. Xi will also reportedly meet U.S. President Joe Biden at a virtual summit in the following week.
Hong Kong’s Hang Seng Index was down 0.50%.
Japan’s Nikkei 225 was down 0.36% and South Korea’s KOSPI fell 0.82%. In Australia, the ASX 200 inched up 0.08%.
Longer maturity U.S. Treasuries halted a rally, with the 30-year yield hitting its lowest level since July 2021 earlier. U.S. bond markets will be closed on Wednesday ahead of a holiday.
On the data front, the U.S. PPI grew 0.6% month-on-month and 8.6% year-on-year. The core PPI grew 0.4% month-on-month, and the CPI figure is due later in the day.
If inflationary pressures persist and central banks tighten monetary policy at an accelerated pace in response, global shares could fall from their recent, near-record levels. St. Louis Fed President James Bullard noted corporate pricing power and has already penciled in two interest rate hikes in 2022.
However, San Francisco Fed President Mary Daly expects “eye-popping” inflation to subside in 2022 as supply-chain bottlenecks subside.
“Because we haven’t seen inflation for a while, people aren’t used to it,” MetLife (NYSE:MET) Investment Management chief market strategist Drew Matus told Bloomberg.
“What we should expect over the next half a year is, as people become more understanding of what the Fed might do, we are going to see more volatility,” he added.
Investors also continue to focus on China Evergrande Group (HK:3333). The developer faces coupon payments totaling $148.1 million for three-dollar bonds before the end of 30-day grace periods on Wednesday.
