Asian Shares Declined Whilst Dollar Steadied – Asia Market Wrap

Asian shares fell as traders awaited critical US inflation data to determine whether the Fed will reduce or keep interest rates next week. The dollar stabilised after a three-day rally.

Stocks in Hong Kong and mainland China dipped Wednesday, as an annual economic gathering began in Beijing. Those in Taiwan and Australia also decreased. South Korean stocks gained for a second session, continuing their rebound from last week’s short-lived martial law, which plunged the country into political chaos.

The US CPI, due later Wednesday, will give Fed officials another look at inflation before their next meeting. Swap trading indicates an 85% possibility of a quarter-point rate cut this month. Meanwhile, China’s two-day Central Economic Work Conference is anticipated to outline policy for the coming year, with markets encouraged by stimulus signals from top authorities.

Economists predict that China’s budget deficit will be the biggest in three decades and that interest rates will be slashed to their lowest since 2015. At least seven Chinese brokerages predict that next year’s fiscal deficit will be 4% of GDP, the highest level since a significant tax overhaul in 1994. Beijing has consistently controlled its budget deficit at or below 3%.