Asian stocks fell on Friday, as growing concerns over China’s economy as well as worsening relations between the U.S. and China overshadowed hopes for Fed rate pause.
China has accused Washington of blocking its development and warned that new restrictions to limit tech investments in China would hurt global supply chains.
Gold lingered near one-month lows as the dollar and bond yields held their ground despite signs of moderating inflation in the world’s largest economy.
After U.S. inflation readings for July came in lower than expected, San Francisco Fed President Mary Daly said that it was premature to say if the Fed has raised rates enough to bring inflation down to the 2 percent target.
Japanese markets were closed due to a public holiday.
Chinese shares tumbled, with the Shanghai Composite Index plunging 2.0 percent to 3,189.25 after Country Garden Holdings, China’s largest developer by contracted sales between 2017 and 2022, forecast a $7.6 billion net loss in the first half.
Hong Kong’s Hang Seng Index dropped 0.9 percent to 19,075.19. Alibaba Group Holding advanced 1.5 percent after its quarterly revenue beat estimates.
Seoul stocks gave up early gains to end lower, dragged down by battery makes. The Kospi ended down 0.4 percent at 2,591.26.
Australian markets ended modestly lower despite outgoing Australian central bank chief Philip Lowe telling lawmakers the worst was over for inflation and interest rate rises.
The benchmark S&P ASX 200 Index dipped 0.2 percent to 7,340.10 as China demand concerns weighed on mining and energy stocks. The broader All Ordinaries Index settled 0.2 percent lower at 7,554.20.
Across the Tasman, New Zealand’s benchmark S&P NZX-50 Index edged up 0.2 percent to 11,836.71 after the release of weak manufacturing data.
U.S. stocks ended on a flat note overnight, giving up early gains after data showed inflation rose less than expected in July and weekly jobless claims rose more than expected to the highest level in a month, raising hopes that the Fed was close to end its tightening cycle and could start cutting rates early next year.
The consumer price index rose to an annual 3.2 percent in July from 3.0 percent in June and versus estimates of 3.3 percent. Annual core inflation ticked down to 4.7 percent from June’s 4.8 percent.
The Dow edged up 0.2 percent, the tech-heavy Nasdaq Composite inched up 0.1 percent and the S&P 500 finished marginally higher.
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