Asia’s stock markets fall because Fed worries are bigger than China’s reopening report.
Most Asian stock markets fell on Friday as traders were cautious before important U.S. payroll data that is expected to affect monetary policy. However, a report that China plans to ease its strict anti-COVID measures helped limit losses.
Asian stocks were also down on Friday because of uncertainty about the future of U.S. inflation. This came after data showed that the Federal Reserve’s preferred inflation measure, the PCE inflation index, stayed well above the central bank’s target range in October.
The Shanghai Composite index fell 0.3%, and the Shanghai Shenzhen CSI 300 index fell 0.5%. Both indexes were expected to go up by 3.6% and 1.7%, respectively, for the week. This was because there was more and more talk that China would end its strict COVID policy.
Related: Asia’s stocks feel better when Chinese homes go up in value.
Reuters said that the government is thinking about doing this because of widespread protests against its lockdown measures and slowing economic growth, which have never happened before. A reopening would be a big relief for Chinese markets and other Asian markets that depend on China a lot.
The Hang Seng index in Hong Kong dropped 0.7% on Friday, but it was expected to rise 2.6% this week.
Broader Asian stocks went down because the U.S. PCE inflation reading made people less sure about where monetary policy was going. Even though the Fed said it would raise interest rates more slowly in the near future, it also said that rates could reach a higher peak if inflation stays high for a long time.
The Fed is also likely to take into account the U.S. payroll data that will be released later today. This is because the Fed wants the labour market to soften to control inflation.
But the idea of smaller rate hikes in the U.S. helped Asian markets this week, especially those with a lot of tech companies.
This week, the KOSPI index in South Korea was expected to go up 0.3%, while the Taiwan Weighted index was trading up 1.4%.
On Friday, India’s Nifty 50 and BSE Sensex 30 fell from their record highs. But the two were going to end the week 1% higher because more people were optimistic about India’s economy.
This week, Japanese stocks were a big exception. The Nikkei 225 index fell 1.7% on Friday and nearly 2% over the course of the week.
Related: Asia’s stock markets stay strong even as Wall Street falls and China’s trade disappoints.
This week, a number of bad economic reports made people more worried about a slowdown in Japan’s economy, which is already struggling with rising inflation and a weak yen.
