Investing.com — Asian stocks mostly fell on Wednesday on anticipation of more signals on inflation and the Federal Reserve, while reports of more US trade scrutiny against China also weighed on sentiment.
Regional stocks received a few positive signals from record closing levels in the and , which were mainly supported by the strength of heavyweight technology stocks. US stock futures moved little in Asian trade.
Chinese stocks fall, reports indicate more trade problems between the US and China
The China index and its indices fell by about 0.2% each, while the Hong Kong index fell by 1.6% and was the worst performer among the Asian indices.
The United States is reportedly considering broader trade sanctions on semiconductor exports to Russia, potentially targeting chip vendors in China and Hong Kong who potentially supply Moscow.
Increased US scrutiny of Chinese companies has raised concerns about deteriorating trade relations between the world's largest economies. Earlier in 2024, the United States imposed increased tariffs on several major Chinese industries.
Mixed Chinese inflation data also provided moderate signs for the economy. While inflation contracted at its slowest pace in 15 months in May, inflation grew less than expected.
Other Asian markets also declined. Japan and the indices fell by about 0.8% each, after the inflation reading was hotter than expected for May.
The reading came just days before , when the central bank is widely expected to tighten policy further by reducing some of its bond purchases.
The higher PPI reading was also linked to the Bank of Japan's expectations that inflation will rise this year, giving the bank more impetus to raise interest rates further.
Australia's index fell 0.5%, while South Korea's index was an outlier among its peers, rising 0.3% thanks to some strength in chipmaking stocks.
Indian index futures pointed to a flat open after the index hit new record highs this week. The Nifty Party has largely ignored the impact of the surprise result of the 2024 general elections, which saw the BJP-led alliance get a smaller majority.
But Prime Minister Narendra Modi's cabinet appointments, unveiled this week, showed that his plans for economic reforms remain on track.
Fed interest rate decision, CPI in focus
Overall sentiment remained fragile ahead of the conclusion of the Fed's two-day meeting later on Wednesday, when the central bank is widely expected to hold its meeting.
But his inflation forecasts and interest rate cut plans will be closely watched.
Ahead of the Fed's meeting, key data is also scheduled for Wednesday, expected to show that inflation remained flat in May, giving the Fed little incentive to start cutting interest rates.