Asia: More disappointing Chinese data drags region's markets lower

All Asian markets fell on Wednesday as data showed China’s consumer inflation slowed down in September and domestic demand remained weak.

The Shanghai Composite Index lost 0.93%, while Hong Kong’s Hang Seng fell 0.71% as concerns over a slowdown in the world’s second largest economy continue to mount.

According to China’s National Bureau of Statistics, the consumer price index rose 1.6% year-on-year in September compared with a 2% increase in August and with analysts’ expectations for a 1.8% gain.

The figures fell well below the People’s Bank of China’s 3% target and analysts believe Beijing will be forced into implementing more stimulus measures if China is to reach its target of about 7% this year.

“The weak inflation data, along with other disappointing releases recently such as yesterday’s trade figure, makes more monetary easing and fiscal stimulus very likely if China is to achieve something close to the 7% growth it targeted at the beginning of the year,” said Oanda analyst Craig Erlam.

Meanwhile, China’s producer price index remained deep in negative territory in September, as it declined 5.9% year-on-year last month, falling flat compared to August and in line with analysts’ expectations.

“Global commodity price deflation is still weighing on the price of industrial inputs, which are heavily weighted in the index,” said analysts at Capital Economics.

“We aren’t overly concerned by this since with the price of domestic goods holding up better, many firms should actually benefit from these lower input costs.”

Elsewhere, Japan’s Nikkei Stock Average lost 1.89%, while Australia’s S&P/ASX 200 and Singapore’s FTSE Strait Times Index slid 0.11% and 0.03% respectively.

On the currencies front, the yen climbed 0.20% against the dollar, while the greenback fell 0.28% against its Australian counterpart.

“The next major focus on Wednesday will be the retail sales for the States which will be released in the US trading session,” said FXTM research analyst Lukman Otunuga.

“If both core retail and retail sales fail to meet expectations, this may add to the recent rope of soft US economic data from October which will result in additional downward pressures on the US dollar.”

Meanwhile, the Singaporean dollar climbed over 1% against the greenback after the Monetary Authority of Singapore unveiled plans to target a slower appreciation of the Singapore dollar against a basket of currencies, in the wake of a softer outlook for the global economy.