- Asian equities hold lower grounds tracking their US counterparts amid risk-off mood.
- Virus spread challenges economic recovery, monetary policy tightening concerns also weigh on the sentiment.
- China PPI jumps to 13-year high in August, Indonesia Retail Sales dropped during July.
- ECB’s PEPP verdict becomes the key event, US President Joe Biden’s six-pronged strategy is important too.
Global markets, including Asia, turn skeptical ahead of the all-important ECB monetary policy on Thursday. Also exerting downside pressure on the mood are growth concerns and virus updates, not to forget Fed tapering chatters.
Read: Wall Street Close: Bears tighten grips over economic fears, pre-ECB caution
Investors initially took clues from the downbeat US stocks before the fresh covid numbers and economics added weakness into the sentiment. That said, the MSCI’s index of Asia-Pacific shares outside Japan drops 1.15% while Nikkei 225 prints 0.80% intraday loss by the press time of the pre-European session.
It’s worth noting that the challenges to the economic recovery were cited by the Fed policymakers while teasing taper tantrums after the US JOLTS Job Openings refreshed record top. St. Louis Fed Bank President James Bullard and New York Fed Bank President John Williams backed tapering in 2021 whereas Dallas Federal Reserve Bank President Robert Kaplan makes the case for an October taper despite cutting on Q3 GDP due to covid.
The mood soured further after Australia reports the second day of increase in covid cases and China also marked an uptick in the COVID-19 numbers. Further, Japan is ready to extend the covid-led state of emergency after the activity restrictions end of September 12.
Talking about data, China Consumer Price Index (CPI) dropped below 1.0% forecast and prior to 0.8% YoY, MoM figures also declined below 0.5% market consensus to 0.1%. However, the factory-gate inflation measure, the Producer Price Index (PPI), crossed 9.0% expected figures with a 9.5% level to jump to the 13-year high. Elsewhere, Indonesia Retail Sales contracted by 2.9% versus the previous expansion of 2.5%.
China’s summoning of gaming firms on Wednesday precedes the pre-ECB fears to also disappoint the Asian bulls.
Amid these plays, stocks in Australia drop around 2.0% whereas markets in New Zealand and China remain down by nearly 1.0%. Further, South Korea’s KOSPI loses 1.35% whereas Indonesia’s IDX and Indian shares print mild losses by the press time.
Although the ECB’s verdict on the Pandemic Emergency Purchase Program (PEPP) become the key, comments by US President Joe Biden for the six-pronged strategy to battle the pandemic woes also become crucial to follow. Also, virus updates, stimulus chatters and weekly US jobless claims are important too.
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