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EMERGING MARKETS-Asian stocks retreat on fresh China lockdown worries, eyes on key U.S. data

reuters.com · 06/10/2022 01:03
EMERGING MARKETS-Asian stocks retreat on fresh China lockdown worries, eyes on key U.S. data

Investors await U.S. inflation data

Most stocks in the region fall, FX mixed

By Indranil Sarkar

- Asian stocks fell on Friday as the Chinese cities of Shanghai and Beijing went back on COVID-19 alert, while Indonesian stocks took a hit after the world's biggest palm oil exporter raised its maximum palm oil export tax.

Sentiment in the region soured after news of renewed restrictions in China as new COVID cases emerged. Multiple districts in Beijing are shutting down entertainment venues, while most citizens in Shanghai are facing new rounds of mass testing to prevent a new outbreak.nL1N2XW01L

Investors were also cautious ahead of U.S. inflation data later in the day, which could guide the Federal Reserve's policy tightening path.

Jakarta stocks .JKSE fell 1.2% and were on track for a weekly fall after three consecutive weeks of gains.

Indonesia raised its maximum export tax for crude palm oil by 44% but reductions in another levy are expected to reduce overall fees to send palm oil products overseas and encourage export shipments. nL1N2XX036

The government separately said it would allow exporters that have not joined its bulk cooking oil distribution programme to ship palm oil by paying a $200 per tonne charge on top of the export tax and levy. nJ9N2W4016

Stocks in Seoul .KS11 also dropped over 1% and were set to close the week with their worst performance in nearly 5 months, weighed by rising inflation worries and a truckers strike that is threatening to severely curtail shipments of raw materials for semiconductors and petrochemical products. nL1N2XX02W

Benchmark indexes in Malaysia .KLSE, Singapore .STI, Philippines .PSI, Taiwan .TWII and Thailand .SETI also fell between 0.5% and 2%.

The U.S. Labor Department's Consumer Price index is due later in the day and has kept market participants anxiously waiting for confirmation that decades-high inflation reached its summit in March and has started to ease. nL1N2XW1WK

"Peaking U.S. inflation imaginably provides some relief from fears of an inadvertent policy-induced hard-landing from Fed oversteer," Vishnu Varathan, head of economics & strategy at Mizuho Bank wrote.

"But this may be insufficient to override capital outflow risks associated with coincident out-run in EM Asia’s inflation eroding EM Asia’s real returns in EM Asia."

Market watchers still expect the Federal Reserve to raise interest rates by 50 basis points next week, but a cooler inflation reading could add to views it is likely to throttle back tightening later in the year.

Currencies were, however, mixed across the region against a steady dollar =USD.

The Thai baht THB=TH weakened 0.3% and was set to lose nearly 1% for the week, which saw the country's central bank holding its key rate at a record low to ensure a continued economic recovery but saying upside risks to both growth and inflation were reducing the need for the current accommodative policy stance. nL4N2XU2QK

South Korean won KRW= weakened the most, falling 0.7% and was on track to mark the biggest weekly fall in 10 months.


HIGHLIGHTS

** Top losers on the Jakarta stock index include PT Trimuda Nuansa Citra Tbk TNCA.JK down 6.96%; Gaya Abadi Sempurna Tbk PT SLIS.JK down 6.91%

** Top losers on FTSE Bursa Malaysia Kl Index .KLSE include Genting Bhd GEBHY down 5.77%; Top Glove Corporation Bhd TGLVY down 4.92% at 1.16 ringgit

** Indonesian 10-year benchmark yields are up 4 basis points at 7.228%​​

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.20

-14.16

.N225

-1.29

-3.16

China

CNY=CFXS

+0.02

-5.01

.SSEC

0.58

-10.50

India

INR=IN

-0.07

-4.49

.NSEI

-1.27

-6.25

Indonesia

IDR=

-0.07

-2.20

.JKSE

-0.96

8.09

Malaysia

MYR=

-0.11

-5.30

.KLSE

-0.63

-4.30

Philippines

PHP=

+0.03

-3.69

.PSI

-2.39

-7.38

S.Korea

KRW=KFTC

-0.74

-6.12

.KS11

-1.31

-12.98

Singapore

SGD=

+0.15

-2.30

.STI

-0.86

1.87

Taiwan

TWD=TP

-0.24

-6.44

.TWII

-0.86

-9.55

Thailand

THB=TH

-0.29

-3.64

.SETI

-0.22

-1.20







































Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock marketshttps://tmsnrt.rs/2zpUAr4

(Reporting by Indranil Sarkar in Bengaluru; Editing by Kim Coghill)

((Indranil.Sarkar@thomsonreuters.com; Mobile: +91 7022132226;))