Most Asian stock markets fell as investors shifted away from risky assets ahead of more monetary policy signals from the United States this week. Rising COVID-19 cases in China tempered hope for the nation’s economic reopening.
Markets were concerned that China’s relaxation of anti-COVID measures would lead to significantly higher infection rates, which caused stocks in China and Hong Kong to decline the most on the day. The number of daily infections in China has already reached an all-time high.
The removal of COVID curbs has largely offset optimism about the country’s potential economic recovery.
The Hang Seng index in Hong Kong dropped close to 2%. The Shanghai Composite index and the Shanghai Shenzhen CSI 300 both experienced 0.801 and 0.602 percent declines, respectively. As China relaxes its anti-COVID regulations, analysts anticipate that the Chinese markets will be unstable. Taiwan’s Weighted index fell by 0.7%.
Japan’s Nikkei 225 fell 0.211% in November after data showed the country’s producer price inflation remained close to a 40-year high. The reading indicates that price pressures will probably persist and exert short-term pressure on the Japanese economy. Before important consumer inflation data that is due later in the day, which is anticipated to show that price pressures in the nation have further subsided, the Nifty 50 and BSE Sensex 30 indexes in India were flat on Monday.
This week’s focus is squarely on key US consumer price index inflation data, due on Tuesday. While inflation should have slowed further in November, higher-than-expected producer price index inflation for the month may presage a similar trend in consumer prices.
On the other hand, a reading of inflation might cause the Fed to signal its hawkishness more strongly. Several Fed officials have warned that persistent inflation will cause US interest rates to peak much higher than expected.
On Sunday, Treasury Secretary Janet Yellen stated that inflation should fall significantly in 2023, indicating positive market trends.
As liquidity shrank and investors flocked to higher-yielding debt markets this year, rising interest rates in the United States significantly impacted Asian stock markets.