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Asian stocks drop ahead of Chinese economic data, Fed cues

China stocks

China’s Shanghai Composite index was the worst performer for the day, down 1.1 per cent

Most Asian stock markets pulled back on Monday as investors huddled ahead of a series of Chinese economic data, while monetary policy signals from a slew of Federal Reserve speakers were also due later in the week.

China’s Shanghai Composite index was the worst performer for the day, down 1.1 per cent as local industrial, shipping, and media stocks saw sharp losses amid fading expectations over an economic recovery in the country.

The blue-chip Shanghai Shenzhen CSI 300 index dropped 0.4 per cent, with investors now awaiting industrial production, retail sales and fixed asset investment data from China, due on Tuesday. While the data is anticipated to show some improvement in April from the month earlier, it also comes after a slew of Chinese economic readings missed expectations for the month.

Chinese imports, inflation and manufacturing activity all contracted in April, suggesting that a post-COVID bounce back was running out of steam.

Weakness in China soured sentiment towards wider Asian markets, given the country’s role as a leading trading centre for the region. Hong Kong’s Hang Seng index was flat on Monday, while South Korea’s KOSPI and the Taiwan Weighted index shed 0.3 per cent each.

Australia’s ASX 200 declined 0.1 per cent as figures showing a continued reduction in building approvals indicated continued weakness in the country’s housing market, which in turn weighed on bank stocks.

Shares of Newcrest Mining Ltd increased 1.2 per cent after its board proposed a $17.8bln takeover offer from U.S. miner Newmont Corp.

Regional markets took a weak lead-in from Wall Street after softer-than-expected consumer sentiment figures on Friday, which indicated decelerating growth as the US economy struggles with high interest rates and inflation.

Focus this week is now on U.S. industrial production and retail sales figures for more indications about the country’s economy. Markets are also awaiting a slew of Fed speakers this week, most notably Fed Chair Jerome Powell on Friday, for more insight into monetary policy, amid rising expectations that the Fed will keep interest rates higher for longer.

Japan’s Nikkei 225 index was the only exception for the day, gaining 0.7 per cent as softer-than-expected producer inflation figures indicated less pressure on BoJ to tighten policy in 2023. Sentiment towards Japan was also supported by a stellar Q1 earnings season.

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