By Gregor Stuart Hunter
The global pullback in equity markets continued in Asia on Wednesday, where stocks opened lower across the board, following the firing of U.S. Secretary of State Rex Tillerson.
In China, better-than-expected economic data raised the specter that the central bank might be forced to raise interest rates to keep growth from overheating.
Chinese industrial-production and fixed-asset investment data showed the economy grew much faster than expected in the first two months of 2018. That came after consumer prices unexpectedly rose in February during the Lunar New Year holiday.
“We feel that inflation is going to pick up and there will be some modest price pressure,” said Irene Cheung, senior foreign exchange strategist for Asia at ANZ.
That may force the People’s Bank of China to raise its key seven-day policy rate this year, she added. “That would have a slight dampening effect on the economy overall,” she said.
Financial and tech stocks, key soft points for the U.S. market on Tuesday, lagged behind in Hong Kong also.
Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -3.34% fell 0.9% after the yen /zigman2/quotes/210561789/realtime/sampled USDJPY -0.1201% weakened and then rebounded overnight to leave it at around ¥106.50 per U.S. dollar. Minutes from the Bank of Japan’s January meeting, released Wednesday, showed that some board members warned the central bank should keep a close eye on unexpected side effects from the current monetary policy.
Financial stocks were also hit by falling bond yields; their recent gains have raised hopes of higher earnings for banks and insurers.
Meanwhile, chip makers Renesas Electronics /zigman2/quotes/203872935/delayed JP:6723 -4.66% and Rohm dropped 3.1% and 1.8%, respectively, after a U.S. index of chip stocks fell 1.6% Tuesday and the Nasdaq Composite’s /zigman2/quotes/210598365/realtime COMP -3.71% seven-day winning streak was snapped. Late Monday, President Donald Trump blocked an effort by Broadcom /zigman2/quotes/200646538/composite AVGO -4.24% to acquire Qualcomm /zigman2/quotes/206679220/composite QCOM -4.26% , citing a national security threat.
The benchmark for Taiwan’s tech-heavy stock market lost 0.5%. Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.18% eased 0.3% even though Samsung Electronics Co. /zigman2/quotes/209800866/delayed KR:005930 +1.94% erased early declines and closed up 0.2%.
Meanwhile, signs have emerged that corporate earnings have started to ease in some parts of the Asia-Pacific region, notably South Korea and Taiwan, said Sean Taylor, chief investment officer for Asia-Pacific at Deutsche Asset Management.
“We’ve taken money out of Asia and put it into the rest of emerging markets,” he said.
Australia’s stock benchmark /zigman2/quotes/210598100/delayed AU:XJO -1.60% fell 0.7%, hurt again by weakness in commodity related stocks. Crude futures rose slightly in Asian trading as a U.S. industry group issued upbeat weekly inventory data.
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