Asian shares tracked a global equities sell-off on Friday as rate hike guidance from the European Central Bank. Jittering over upcoming U.S. inflation data stoked concerns about global growth. While stocks in China rose in hopes of policy loosening.
However, continued strong buying by foreign investors and cautious hopes of regulatory easing on tech firms lifted China stocks on Friday. Despite news that the cities of Beijing and Shanghai were back on COVID-19 alert. China’s blue-chip CSI300 index (.CSI300) was up 0.41%, while Hong Kong shares (.HSI) trimmed earlier losses to be off 0.2%.
Despite denials from the company and the securities regulator. Investors took it as a sign that a long regulatory crackdown on tech firms is in line with the broad accommodative stance recently from China’s top policymakers.
China is now entering an easing circle, which is definitely a good thing for the stock market. Stocks have fallen quite a lot before, so now they will rise again and make up for the losses. I think it is quite something to look forward to. China’s factory-gate inflation cooled to its slowest pace in 14 months in May due to tight COVID-19 curbs, while consumer inflation also stayed subdued.
And with energy prices still pushing higher, it is not yet clear that inflation has peaked. Fed guidance and policy actions may have to turn more hawkish for longer. Financial markets are nervous.”
Investors expect the Federal Reserve to raise interest rates by 50 basis points next week, especially if U.S. consumer price data on Friday confirms elevated inflation.
The consensus forecast sees a year-over-year inflation rate for May of 8.3%, unchanged from April.
Shares on Wall Street tumbled as the market awaited the price data. The S&P 500 (.SPX) and Nasdaq (.IXIC) fell over 2% in their biggest daily percentage declines since mid-May.
-Reuters.
