Asian shares tottered on Wednesday, extending losses after consumer inflation in China cooled unexpectedly heightening concerns about deflationary pressures in the world’s second-largest economy.
China’s consumer price index (CPI) rose 1.6 percent in September from a year earlier, the National Bureau of Statistics(NBS) said, falling short of expectations of 1.8 percent and down from August’s 2.0 percent.
‘Given the lackluster growth outlook, we continue to expect moderate fiscal stimulus from the central government and continued monetary easing,’ said economists at Nomura.
Earlier on Wednesday, the Monetary Authority of Singapore said that it will ease its monetary policy for the second time this year by slowing the pace of the Singapore dollar’s appreciation. The move was aimed at reviving an economy that narrowly avoided a recession in the third quarter.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.8 percent, while Japan’s Nikkei stock index shed 1.8 percent.
Chinese shares were also lower, with the blue-chip CSI300 index and the Shanghai Composite Index both down 0.6 percent.
Australian shares also extended losses after the China price figures, with the S&P/ASX 200 index down 0.5 percent, reflecting China’s importance as Australia’s main trading partner.
On Wall Street on Tuesday, stocks dropped, with the S&P 500 touching a fresh seven-week high before ending solidly down. S&P 500 e-mini futures slipped about 0.2 percent in Asian trading.
Stocks have been underpinned in recent weeks after the U.S. Federal Reserve held off on raising interest rates last month for the first time since 2006. But a main reason for the Fed’s hesitation continued to worry investors, as U.S. policymakers fretted that a global economic slowdown might threaten the U.S. economic outlook.
