Asian Stocks Drop Amid Fears of China and Inflation – Asia Market Wrap
Asian markets fell in tandem with their US counterparts, as rising inflation concerns prompted a selloff in Treasuries and a worsening mood towards China drained sentiment.
MSCI’s regional equities index is set for its largest one-day decline in more than two weeks, wiping out Tuesday’s rise. China’s benchmark stock index fell to its lowest level since September, with investors concerned about an expected increase in US tariffs. The S&P 500 slid more than 1% Tuesday after a report on US service providers showed inflation reaching its highest level since early 2023.
Economic worries are dampening investor confidence across Asia, with Chinese markets showing increased concern over a deflationary spiral. This comes at a time when credit yield premiums are nearing their lowest levels since the global financial crisis, putting investor enthusiasm for a slew of deals flooding global debt markets under scrutiny.
Investors in China’s $11 trillion government bond market have never been more negative. The country’s 10-year rates have dropped to all-time lows in recent weeks, falling more than 300 basis points below their US counterparts. Despite a barrage of economic stimulus measures announced by President Xi Jinping’s administration.
Oil gained for the second day on Wednesday as an industry data showed another decline in US inventories, while Bitcoin fell below $100,000.
