Asian Stocks Mostly Down as China’s Inflation Data Comes in Lower than Expected

Stocks in Asia traded broadly lower on Friday, following a second day of losses in the United States, as China’s inflation data came in lower than expected and investors began to anticipate the possibility of higher interest rates as the Federal Reserve combat inflation.

In January, Chinese consumer prices increased by 2.1% compared to the same year ago. As of 9:27 AM (Thai time), the Shanghai Composite has down 0.14%.

The Hang Seng index in Hong Kong fell 0.98%, pulled down by technology stocks.

As investors processed the Reserve Bank of Australia’s statement on monetary policy, which indicated further hikes were ahead, the S&P/ASX 200 index in Australia declined 0.66%. Earlier this week, the central bank lifted its benchmark interest rate by 25 basis points to 3.25%.

The Nikkei 225 rose 0.56%. The Kospi in South Korea fell 0.52%.

Stocks in the United States closed lower overnight Thursday. In the closing hour of trading, all three major indices reached new lows, having given up previous gains as worries over the Federal Reserve’s future actions on monetary policy countered excitement over the most recent batch of corporate earnings.

Investors have taken note of the recent statistics and the steady drumbeat from central bankers signaling greater tightening ahead, pushing up market pricing for US rates to peak in July. According to Thomas Barkin, president of the Federal Reserve Bank of Richmond, further rate hikes are necessary to bring inflation under control. His statements were consistent with the sentiments expressed by four other Fed officials on Wednesday.