Stocks in Asia Declined as Inflation and Growth Concerns Looms

Stocks in Asia  declined Tuesday as traders weighed concerns about how companies will navigate the economic slowdown and whether fresh Chinese measures will help boost growth.

Shares in Mainland China, Japan, South Korea and Hong Kong  declined.

US shares had closed higher, helped by President Joe Biden’s comments that China tariffs imposed by the Trump administration are being reviewed. The dollar and Treasuries were steady after dropping.

China rolled out a broad package of measures as it seeks to offset the damage from Covid lockdowns on the world’s second-largest economy.

Equities have been volatile as investors assess the outlook for monetary policy, inflation and the impact of China’s strict Covid policies on the global economy. Minutes this week of the most recent Federal Reserve rate-setting meeting will give markets insight this week into the US central bank’s tightening path.

“That is a big risk that the Fed doesn’t get the big economy signals and keep marching along with a very aggressive tightening program,” Margaret Patel, senior portfolio manager at Allspring Global Investments, said on Bloomberg Television. “But if they look at the real world out there they will see it’s time to take a big pause and at that point we will evaluate the market and perhaps try to see to a way through without a recession.”

European Central Bank President Christine Lagarde’s prospective timetable for two quarter-point interest-rate hikes has irked colleagues who want to keep open the option of moving faster.

Kansas City Fed President Esther George said she expects the central bank to raise interest rates to 2% by August, with the further course of tightening being guided by how surging inflation cools off.

Geopolitics will be closely watched after comments by Biden on Taiwan threatened to raise tensions with Beijing.