Asian Shares Decline On Fed, China Covid Worries

asian down 12dec22 lt

Asian stocks declined on Monday as data on U.S. producer prices sent mixed signals on inflation and China faced a surge in Covid 19 cases after partially easing aspects of its so-called zero-Covid policy.

Investors looked ahead to the release of U.S. consumer inflation data as well as a slew of central bank decisions this week for additional clues on the economic and interest rate outlook.

Chinese and Hong Kong stocks led regional losses after a top government health adviser warned that the epidemic in China is spreading rapidly and that it will be difficult to completely cut off the transmission chain.

China's Shanghai Composite Index dropped 0.9 percent to 3,179.04, while Hong Kong's Hang Seng Index tumbled 2.2 percent to 19,463.63. The Taiwan Weighted index, which is heavily exposed to China, gave up 0.6 percent.

Japanese shares edged down slightly after data showed producer price inflation in the country remained at a nearly 41-year high in November, suggesting that price pressures are likely to remain more stubborn in the near term.

The Nikkei 225 Index slipped 0.2 percent to 27,842.33, while the broader Topix ended 0.2 percent lower at 1,957.33.

While tech stocks led losses, Toshiba rallied nearly 2 percent on reports that its preferred bidder, Japan Industrial Partners, has moved closer to securing bank financing for a buyout.

Seoul stocks fell notably, with the Kospi ending 0.7 percent lower at 2,373.02 amid deepening recession fears. Samsung Electronics, Samsung Biologics and Celltrion fell 1-2 percent. Chip giant SK Hynix dropped half a percent after its gloomy forecast for fourth-quarter performance.

Australian markets closed lower, dragged down by heavyweight mining and utilities stocks. The benchmark S&P/ASX 200 Index slid 0.5 percent to 7,180.80, while the broader All Ordinaries Index closed 0.5 percent lower at 7,370.60.

Origin Energy shares slumped 7.8 percent as the government announced plans to cap coal and gas prices for a year.

Tyro Payments plummeted 19.5 percent after rejecting an improved takeover offer from Potentia Capital and ceasing talks with Westpac.

Across the Tasman, New Zealand's benchmark S&P NZX-50 index fell 0.8 percent to finish at 11,506.45.

U.S. stocks fell on Friday and Treasury yields rose, as a measure of consumer sentiment exceeded expectations in December and producer price data for November indicated that inflation is stickier than most assume, complicating the Fed's task to slow the pace of its rapid interest-rate hikes.

The Dow dropped 0.9 percent, while the tech-heavy Nasdaq Composite and the S&P 500 both shed around 0.7 percent.

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