Asian Stocks Down, China Likely to Widen Private Industry Crackdown

imageStock Markets33 minutes ago (Oct 11, 2021 09:55PM ET)

(C) Reuters.

By Gina Lee – Asia Pacific stocks were down on Tuesday morning, with China potentially widening a crackdown on private industry and continuing concerns about elevated inflation thanks to increasing energy costs.

The benchmark U.S. 10-year Treasury yield was little changed as the cash market reopened from a U.S. holiday.

Japan’s Nikkei 225 fell 0.88% by 9:49 PM ET (1:49 AM GMT). South Korea’s KOSPI slid 1.44%, with the Bank of Korea keeping its interest rate unchanged at 0.75% as it handed down its policy decision earlier in the day.

In Australia, the ASX 200 was down 0.35% and Hong Kong’s Hang Seng Index fell 1.10%.

China’s Shanghai Composite was down 0.53% and the ShenzhenComponent was down 0.32%. The mood was bleak as a report suggested China is widening scrutiny of private industry by examining ties to state banks. Some holders of two China Evergrande Group (HK:3333) are also yet to receive payment for two U.S. dollar bonds with coupons due Monday, and the developer’s debt woes continue.

Meanwhile, China will release trade and inflation data later in the week.

A continuous global energy crunch trimmed oil’s recent gains, while also driving aluminum prices to a 13-year high. Investor concerns over inflation that is being driven by the energy crunch and COVID-19-induced supply chain snafus impacting company profits and economic recovery continue to persist. However, some investors were optimistic about financial firms’ third-quarter earnings season that will kick off this week.

“We expect third-quarter earnings to be very, very strong. But it’s that forward look into the fourth quarter and 2022 that has everyone on edge,” RiverFront Investment Group senior market strategist Rebecca Felton told Bloomberg.

Investors also await U.S. data, including the consumer and producer price indexes, due later in the week. The data is likely to shape the U.S. Federal Reserve’s likely timeline for asset tapering and interest rate hikes.

“Upcoming data releases could spur added stagflation concerns. In particular, September CPI inflation could be higher than expected and retail sales lower,” Standard Chartered (OTC:SCBFF) Plc head of global G10 FX research and North America macro strategy Steve Englander said in a note.

Atlanta Fed President Raphael Bostic will speak later in the day, and the Fed will also release the minutes from its latest meeting on Wednesday.

Asian Stocks Down, China Likely to Widen Private Industry Crackdown

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