Asian Stocks Drop Ahead of China Economic Data
Asian stocks slipped in early trade after U.S. stocks struggled to gain traction as traders braced for a raft of Chinese data due Friday, including fourth-quarter growth.
Shares in Japan fell as the yen largely held gains from earlier in the week, while shares in Australia fluctuated, weighed down by Rio Tinto Group after a report that it has held early-stage talks to merge its business with Glencore Plc. U.S. stock futures were little changed.
The poor start in Asia came as this week’s global risk rally, fueled by traders wrapping up bets on a Federal Reserve interest rate cut after tame inflation data on Wednesday, lost steam. Focus will now turn to official Chinese data due Friday that is likely to show the world’s second-largest economy failed to break last year’s deflationary cycle. “Stimulus, stimulus, stimulus, especially on the fiscal side, is badly needed in China,” said Frederic Neumann, chief Asia economist at HSBC Holdings Plc in Hong Kong. “We’ve seen in other countries that it takes a big policy push to get out of disinflation permanently. And that’s something we think will happen gradually in China, but very gradually.”
While China’s growth is still expected to pick up in real terms in the final quarter, the gross domestic product deflator the broadest measure of price changes in an economy — will hit minus 0.2% in 2025, according to the median forecast of 15 analysts surveyed by Bloomberg.
While those numbers may be enough for authorities to say they’re meeting their target for economic growth of around 5%, “we expect the data to show that China’s economy remains weak,” wrote Kristina Clifton, a senior economist and currency strategist at Commonwealth Bank of Australia. That “will likely reinforce expectations of policy support, which will continue to put downward pressure on Chinese interest rates” and the yuan.
Adding to volatility in Chinese assets on Friday, China Vanke Co. Chief Executive Zhu Jiusheng was taken away by police, the Economic Observer reported, citing unnamed sources. A task force sent by the Shenzhen regional government, where the state-backed developer is based, has stepped in to run the company and it could be taken over or restructured, the report said.
Meanwhile, Asian chip stocks will be in focus after Taiwan Semiconductor Manufacturing Co. projected quarterly sales and capital expenditures that beat analysts’ estimates, fueling hopes that spending on AI hardware will remain resilient in 2025.
Source: Bloomberg
