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HONG KONG (Reuters) – Asian stocks stumbled on Wednesday, as more disappointing Chinese economic data and the absence of meaningful stimulus from Beijing continued to weigh on investor sentiment.
Europe is poised to open lower for another day with FTSE futures down 0.15% at 0527 GMT. E-mini futures for the S&P 500 index were largely flat.
MSCI’s gauge of Asia Pacific stocks outside Japan widened losses to decline 1.17% to an 11-week low.
China’s new home prices fell for the first time this year in July, data showed Wednesday, the latest in a string of downbeat numbers that point to a rapid loss in economic momentum and underline the urgency for more bolder policy support to shore up activity.
On Tuesday, China reported weaker than expected July activity data, which was followed by news that Beijing would no longer publish youth unemployment data, which further rattled confidence in Beijing.
The PBOC also unexpectedly lowered its policy rate on Tuesday, earlier than many investors had expected. That move followed a string of disappointing data on loans and credit, the housing market and trust industry as well as the threat of deflation.
“Investors’ sentiment toward China is pretty bad,” said Redmond Wong, Greater China market strategist at Saxo Markets.
Wong was most concerned about month-to-month decline in China’s retail sales and weak infrastructure investments, which suggested a lack of local government funding.
China and Hong Kong stocks extended declines with the Hang Seng Index down as much as 1.39% and China’s blue-chip CSI 300 Index 0.45% lower.
“We think the Chinese Central bank is not going hard enough on reducing interest rates, encouraging the banks to lend more and stimulate very flat consumer activity,” said John Milroy, an investment adviser at Ord Minnett.
Japan’s Nikkei 225 index slipped 1.3% to a two-month low with banking shares down after a report from ratings agency Fitch on a possible downgrade of U.S. major banks.
Australia’s S&P/ASX 200 index fell nearly 1.5%, its biggest drop in about six weeks.
Markets will get another read on major economies with Britain’s inflation data and Federal Reserve minutes out later in the day.
The euro zone also announces preliminary second quarter gross domestic product figures, which are estimated to show meager growth of 0.2% and a decline in industrial production.
Analysts at Commonwealth Bank of Australia (OTC:CMWAY) (CBA) expected the Bank of Engalnd to continue to ratchet up rates to curb high core inflation, even if it leads to a recession.
“In contrast to the other major economies, UK core inflation has not shown a meaningful turnaround yet,” CBA said in a note. “…A UK recession will likely overshadow the impact of higher interest rates, and therefore pull GBP/USD down towards year‑end.”
All three major U.S. equity indexes ended lower on Tuesday, after a stronger-than-expected U.S. retail sales data.
The data increased the odds for the Fed to keep rates at high levels for longer and offered strength to the greenback, pressing on riskier currencies, typically the Australian and New Zealand dollars, said Tina Teng, markets analyst at CMC Markets APAC & Canada.
U.S. crude was down 0.36% at $80,7 a barrel, while Brent fell 0.35% to $84.59 a barrel.
Spot gold was up 0.14% at around $1,904.2 an ounce.
