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EMERGING MARKETS-Asian stocks fall on China lockdown woes, U.S. inflation data eyed

EMERGING MARKETS-Asian stocks fall on China lockdown woes, U.S. inflation data eyed

reuters.com · 06/10/2022 03:26
EMERGING MARKETS-Asian stocks fall on China lockdown woes, U.S. inflation data eyed

Investors await U.S. inflation data

Most stocks in the region fall, FX mixed

By Indranil Sarkar

- Asian stocks fell on Friday, spooked by a fresh COVID-19 alert in Shanghai and Beijing, 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 on news of renewed curbs 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 1.5% 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

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. nL1N2XX02WnL1N2XW32R

Benchmark indexes in Malaysia .KLSE, Singapore .STI, Philippines .PSI, Taiwan .TWII and Thailand .SETI also fell between 0.5% and 3%.

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 and 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.

"Swings in USD, UST yields are to be expected if actual reading surprises, but USD dips may still prove to be shallow given FoMC next week and signs of incremental haven demand given equity woes, growth concerns," analysts at Maybank wrote in a note.

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

The Thai baht THB=TH weakened 0.4% and was set to lose nearly 1% for the week, which saw a shift by the central bank to a more hawkish footing stunning markets and appearing to finally end policymakers' tolerance for mounting price pressures, but a range of risks are likely to keep any tightening gradual. nL4N2XX0MD

South Korean won KRW=KFTC weakened the most, falling 1% and was on track to mark the biggest weekly fall in 10 months after the country's current account balance became a deficit in April for the first time in two years on a reduced trade surplus and annual dividend payment to stock investors. nP8N2X400Q

HIGHLIGHTS

** In Philippines, top index losers are Ayala Land Inc ALI.PS down 5.36%; Bank of the Philippine Islands BPI.PS down 5.32% ; SM Investments Corp SM.PS down 4.87%

** 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%

** 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=

+0.40

-13.98

.N225

-1.49

-3.36

China

CNY=CFXS

+0.11

-4.93

.SSEC

1.41

-9.76

India

INR=IN

-0.09

-4.50

.NSEI

-1.41

-6.39

Indonesia

IDR=

+0.07

-2.06

.JKSE

-1.35

7.66

Malaysia

MYR=

-0.14

-5.32

.KLSE

-0.79

-4.45

Philippines

PHP=

+0.04

-3.68

.PSI

-3.00

-7.96

S.Korea

KRW=KFTC

-0.95

-6.31

.KS11

-1.13

-12.82

Singapore

SGD=

+0.18

-2.27

.STI

-0.91

1.81

Taiwan

TWD=TP

-0.22

-6.42

.TWII

-0.97

-9.65

Thailand

THB=TH

-0.46

-3.80

.SETI

-0.30

-1.28


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

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

(Reporting by Indranil Sarkar in Bengaluru; Editing by Shailesh Kuber)

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