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Asian Stocks Slip on China and Fed Concerns

Asian stock markets fell on Tuesday as optimism over a Chinese reopening faded, and investors grew cautious ahead of cues on US monetary policy from Federal Reserve Chair Jerome Powell.

Jarome Powell
Jarome Powell

China's Stock Market Retreats Amid COVID-19 Outbreaks

China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.1% and 0.2%, respectively, while Hong Kong's Hang Seng index dropped 0.2% from a six-month high. Gains in technology stocks limited losses as Beijing promised to stop regulation against the country's largest internet firms. However, investors grew cautious about a short-term economic recovery in China as it faces a new outbreak of COVID-19 after relaxing most anti-COVID measures.

Investors Brace for Powell Address and Economic Data

Investor sentiment in Asia turned cautious ahead of Powell's address, focusing on any shifts in the Fed Chair's hawkish rhetoric, particularly as recent economic readings showed cooling inflation expectations. This week's focus is also on US consumer inflation data for December, which is expected to show a further easing of price pressures. India's Nifty 50 and BSE Sensex 30 indexes fell 0.6% each, while Indonesian stocks led losses in Southeast Asia with a 1.5% drop. China-related bourses in South Korea and Australia decreased by 0.2% and 0.3%, respectively.

Fed's Approach to Rates May Relieve Asian Markets

Comments from some Fed officials overnight suggested the central bank will keep rates higher for longer, denting regional sentiment. However, the Fed is expected to hike slower in the coming months, which may relieve Asian markets after rising interest rates impacted regional stocks in 2022. Japan's Nikkei 225 index was among the exceptions on Tuesday, rising 0.7% after a long weekend. However, higher-than-expected inflation readings for December from Tokyo showed further economic pain for the country as it grapples with rising price pressures and a weakened yen.

Singapore Stocks Boosted by Olam Group's Listing Plan

Shares of commodity trading giant Olam Group Limited (SGX: OLAG) in Singapore jumped nearly 6%, hitting a five-month high after the company announced plans to list its agricultural business in Saudi Arabia by June 2023.