China stocks closed lower on Wednesday as weak March import data fanned fears of a further slowdown in economic growth amid the country’s worst coronavirus outbreak in two years.
Hong Kong saw some gains though, shrugging off losses on Wall Street and across Europe sparked by unsettling US inflation data.
And Tokyo shares closed higher too, along with most other Asian markets, as caution receded over aggressive monetary tightening in the United States.
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China’s imports unexpectedly fell in March as Covid-19 curbs across large parts of the country hampered freight arrivals and weakened demand, while export growth slowed slightly, prompting analysts to expect a worsening in trade in the second quarter.
Nomura analysts said China has been facing a rising risk of recession since mid-March, as their survey showed 45 cities have implemented either full or partial lockdowns, affecting 26.4% of the country’s population and 40.3% of gross domestic product.
The Caixin media group reported that Shanghai was one of the eight cities involved in a pilot scheme launched on Monday to lower centralised quarantine requirements from 14 to 10 days, citing a government plan set out in a document that has not been formally published.
China healthcare and media stocks dropped 3.7% and 3.8%, respectively, while semiconductor shares fell 2.8%. Energy stocks gained 2.9%, with the coal sector up 4.4% while non-ferrous metal firms added 2.4%.
The blue-chip CSI300 index fell 1.0% to 4,139.74, while the Hang Seng Index was up 0.26%, or 55.24 points, to 21,374.37.
The Shanghai Composite Index closed down by 0.82%, or 26.51 points, to 3,186.82, while the Shenzhen Composite Index on China’s second exchange was down 1.74%, or 35.70 points, to 2,012.18.
The benchmark Nikkei 225 index jumped 1.93%, or 508.51 points, to end at 26,843.49, while the broader Topix index gained 1.42%, or 26.43 points, to 1,890.06.
Indian stocks dropped with Mumbai’s signature Nifty 50 index down 0.31%, or 54.65 points, to close at 17,475.65.
Floundering Russia-Ukraine Peace Talks
Global shares were little changed though, pausing after a six-day slump amid a mixed inflation picture, while floundering peace talks between Russia and Ukraine kept oil hovering near recent highs.
Hawkish moves from the world’s top central banks as the Russian invasion of Ukraine pumped up inflation pressures have weighed on equity markets since the start of the year, with the MSCI World Index down around 10%.
Data on Wednesday showed no let-up for Britain after inflation hit a 30-year high of 7%, although this came a day after a lower-than-expected print in the United States which had given some traders cause to hope policy may be tightened more slowly.
“The steepest rises in a generation have unsettled financial markets, as investors digest the unsavoury prospect of tougher hikes in interest rates,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.
Data published on Tuesday showed US monthly consumer prices increased by the most in more than 16 years in March as war in Ukraine boosted the cost of gasoline to record highs, cementing the case for a 50 basis points interest rate hike from the Federal Reserve next month.
US Yields Lower
However, monthly underlying inflation pressures moderated as goods prices, excluding food and energy, dropped by the most in two years.
The data sent US yields lower on Tuesday, snapping seven straight sessions of gains, though they regained a little ground late in the day and in Wednesday trade.
The yield on 10-year Treasury notes was at 2.727%, compared to an over three-year peak of 2.836%, before the inflation data. The two year yield was 2.4241%.
The moves in yields “gave a nod to the rhetoric that US inflation has likely peaked or is very close to it,” Clara Cheong, a strategist at JPMorgan Asset Management, said.
Oil prices remained held steady around recent highs, with Brent crude futures flat at $104.59 a barrel after Russian President Vladimir Putin said that on-and-off peace negotiations with Ukraine “have again returned to a dead-end situation for us.”
Key figures around 0710 GMT
Tokyo – Nikkei 225: UP 1.93% at 26,843.49 (close)
Hong Kong – Hang Seng Index > UP 0.26% at 21,374.37 9 (close)
Shanghai – Composite > DOWN 0.82% at 3,186.82 (close)
Brent North Sea crude > DOWN 0.18% at $104.45 per barrel
West Texas Intermediate > DOWN 0.30% at $100.30 per barrel
New York – Dow > DOWN 0.3% at 34,220.36 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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