Stocks fall in Asia as inflation rises in China

Asian stocks fell on Wednesday, tracking Wall Street’s decline, as Chinese indexes led the decline after the government reported a rise in inflation in October.

The National Bureau of Statistics reported that China’s consumer price index, a key gauge of inflation, rose 1.5% in October, up from 0.7% the previous month. It added that the rise to a 13-month high was mainly driven by jumping food and fuel prices.

Producer prices, or wholesale prices, rose 13.5%, raising concerns that price pressures may limit the central bank’s ability to adjust its policies to support growth. Hong Kong’s Hang Seng fell 1% to 24575.71, while the Shanghai Composite lost 0.8% to 3,479.31.

Julian Evans-Pritchard of Capital Economics said in a report that recent numbers are overstated due to lower comparative data from last year and underlying price pressures remain low.

“We continue to believe that consumer price inflation will remain below 2% in the coming quarters and that inflation is unlikely to be a major impediment to the ability of the People’s Bank of China to ease monetary policy,” he said.

Elsewhere in Asia, Tokyo’s Nikkei 225 lost 0.6% to 29106.78 and South Korea’s Kospi fell 1.1% to 2,929.81. Australia’s S&P/ASX 200 fell 0.1% to 7,423.90.

Stocks on Wall Street closed moderately lower Tuesday, breaking an eight-day winning streak that was driven by the company’s strong earnings and economic data.

The S&P 500 lost 0.4% to 4,685.25. The last time the S&P 500 index had eight straight days of gains was in April 2019. The Dow Jones Industrial Average fell 0.3% to end at 36,319.98 and the Nasdaq lost 0.6% to 15886.54.

Tesla lost 12% after founder Elon Musk said he would sell 10% of his holdings in the electric car maker, based on the results of a Twitter poll. The company’s stock is down more than 16% so far this week, but is up 45% so far this year.

Meanwhile, PayPal — a company Musk co-founded more than two decades ago — fell 11% after the company cut its full-year and revenue forecasts amid growing competition from other fintech companies like Square, Affirm and even traditional banks.

Robinhood is down 3.4% after the popular trading app reported a data breach the day before.

Lower bond yields lowered bank stock prices. Lenders rely on higher yields to collect more profitable interest. The yield on the 10-year Treasury fell to 1.44% from 1.49% late Monday.

Inflation is weighing on US markets, too: The Labor Department reported Tuesday that wholesale inflation rose 8.6% in October from a year earlier, matching the record annual gain in September.

Many industries face higher costs for raw materials and energy as they deal with supply chain problems. This reduced their operations and pushed them to raise prices for finished goods, which in turn increased the cost of products and services to consumers.

The Labor Department will release its October Consumer Price Index on Wednesday, giving a more detailed picture of how inflation is affecting consumers.

The latest round of earnings is coming to a close, but investors still have several big corporate report cards to review. Walt Disney will announce its results on Wednesday. Tapestry, owner of Coach and other luxury brands, will announce its results on Thursday.

Benchmark US crude oil rose 23 cents to $84.38 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $2.22 on Tuesday. Brent crude, the basis for international pricing, rose 47 cents to $85.25 a barrel.

The US dollar rose to 112.90 JPY from 112.86 JPY. The euro weakened to $1.1579 from $1.1595.


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