Asia-Pacific stocks slip as China inflation ticks higher and investors await Fed decision

Equity markets across the Asia-Pacific region traded mostly lower on Wednesday, with participants weighing fresh inflation readings from China and positioning ahead of the U.S. Federal Reserve’s final policy decision of 2023.

China’s consumer price index rose 0.7% in November compared with a year earlier, the fastest pace since February 2022 and in line with a Reuters survey of economists. The result followed October’s 0.2% increase, suggesting a modest pickup in consumer-level price pressures. In contrast, factory-gate prices continued to contract. The producer price index declined 2.2% year on year, exceeding the 2% drop forecast and marking the fourth consecutive annual decline.

The mixed inflation picture was mirrored in mainland and Hong Kong equities. The CSI 300, which tracks the largest stocks on the Shanghai and Shenzhen exchanges, slipped 0.78%. Hong Kong’s Hang Seng Index fell 0.56%, with traders interpreting the data as evidence of persistent weakness in industrial demand despite firmer consumer prices.

Elsewhere in the region, major benchmarks offered a muted performance. Japan’s Nikkei 225 eased 0.22% while the broader Topix ended little changed. In South Korea, the Kospi edged down 0.12%, whereas the tech-heavy Kosdaq advanced 0.2%. Australia’s S&P/ASX 200 finished effectively flat, reflecting cautious sentiment ahead of the U.S. central bank meeting.

The Federal Open Market Committee is scheduled to release its interest-rate decision later on Wednesday in Washington. Market pricing suggests a high probability of a 25-basis-point reduction in the benchmark overnight lending rate, which would replicate quarter-point cuts delivered in September and October. Investors will scrutinize the accompanying statement and updated economic projections for clues about the policy path in 2024. Details of the decision will be available on the Federal Reserve’s official website.

U.S. stock indices offered little direction in the previous session. The S&P 500 dipped 0.09% to close at 6,840.51, while the Nasdaq Composite added 0.13% to 23,576.49. The Dow Jones Industrial Average declined 179.03 points, or 0.38%, finishing at 47,560.29. Losses in Dow components were led by JPMorgan Chase after the bank projected higher-than-anticipated expenses for 2026.

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Wednesday’s subdued trading in the Asia-Pacific region reflected a wait-and-see attitude among investors. The uptick in China’s consumer inflation provided modest evidence of recovering demand, yet the deeper-than-expected fall in producer prices signaled ongoing margin pressure for manufacturers. With external demand uncertain and domestic policy support still unfolding, many participants opted to limit risk ahead of the Fed outcome.

Currency markets were steady during the Asia session, and government bond yields in the region showed limited movement. Commodities were mixed, with crude oil prices holding near recent lows amid concerns about global demand and ample supply.

After the Federal Reserve decision, attention is expected to shift to forthcoming economic releases, including U.S. retail sales and regional manufacturing surveys, as well as central-bank meetings in Europe and the United Kingdom later in the week. Movements in U.S. Treasury yields and the dollar may influence Asia-Pacific trading sentiment in the days ahead.

Crédito da imagem: Visual China Group via Getty Images