Asian Shares Dip As Stimulus Hopes Fade

Asian stocks fell on Thursday as fading hopes of U.S. fiscal stimulus, Brexit woes, the U.S.-China tussle and fresh lockdown restrictions in parts of Europe dented risk appetite.

Chinese shares finished modestly lower as the latest inflation data underscored the challenges still facing the economy. The producer price index fell for an eighth straight month on an annual basis, while consumer prices grew more slowly than expected, data showed earlier in the day.

Meanwhile, the People’s Bank of China said in a statement that it has injected 500 billion yuan ($74.48 billion) worth of medium-term loans into the banking system and kept borrowing costs unchanged for the sixth straight month.

China’s Shanghai Composite Index fell 8.60 points, or 0.3 percent, to 3,332.18, while Hong Kong’s Hang Seng Index tumbled 508.55 points, or 2.1 percent, to 24,158.54 as Chinese President Xi Jinping disliked youth performance in Hong Kong and Macau and advised them to relocate to the mainland.

Japanese shares retreated as Europe’s Covid-19 infection rate continued to increase and U.S. Treasury Secretary Steven Mnuchin downplayed the chances of striking a stimulus deal before the presidential election.

The Nikkei 225 Index shed 119.50 points, or 0.5 percent, to finish at 23,507.23, with healthcare and telecommunication stocks pacing the decliners. The broader Topix ended down 12.11 points, or 0.7 percent, at 1,631.79.

Market heavyweight SoftBank Group and drug maker Takeda Pharmaceutical both lost around 2 percent. In the tech space, Advantest fell 2 percent and Screen Holdings gave up 1.4 percent.

Meanwhile, Australian markets advanced as RBA Governor Philip Lowe fueled expectations of an interest rate cut as early as next month and data showed the country’s labor force outperformed expectations for the second consecutive month.

The unemployment rate in Australia came in at a seasonally adjusted 6.9 percent in September up from 6.8 percent in August but below expectations for 7.1 percent.

The Australian economy shed 29,500 jobs last month compared to forecasts for a loss of 35,000 jobs following the addition of 111,000 in the previous month.

The benchmark S&P/ASX 200 Index gained 31.10 points, or 0.5 percent, to finish at 6,210.30, while the broader All Ordinaries Index ended up 26.80 points, or 0.4 percent, at 6,414.20.

Energy stocks followed oil prices higher, with Origin Energy, Oil Search and Santos climbing around 4 percent each. Mining heavyweights BHP and Rio Tinto rose 2 percent and 1 percent, respectively, while the big four banks rose between 0.3 percent and 0.9 percent.

Seoul stocks fell for a third straight session, with a jump in domestic coronavirus cases and a continued stalemate between Congress and the White House over a U.S. coronavirus stimulus package keeping investors nervous. The benchmark Kospi dropped 19.27 points, or 0.8 percent, to 2,361.21.

South Korea has reported 110 new cases of the virus, half of them linked to a hospital in Busan. Market bellwether Samsung Electronics dipped 1.5 percent and internet portal giant Naver lost 2 percent, while steelmaker POSCO added 2.2 percent.

New Zealand shares pulled back after a recent string of gains as investors reacted to disappointing earnings in the United States and uncertainty around the U.S. stimulus package. The benchmark NZX-50 Index ended down 56.88 points, or 0.5 percent, at 12,486.73, snapping an 11-session winning streak.

A2 Milk Company and Fisher and Paykel Healthcare fell 3.1 percent and 2.1 percent, respectively. Meridian Energy jumped 3.9 percent after the company reported that September was a record month for wind generation.

U.S. stocks ended lower overnight as investors reacted to a mixed bag of quarterly earnings reports and downbeat comments from Treasury Secretary Steven Mnuchin on the prospects for a new stimulus bill before the election.

The Dow Jones Industrial Average dropped 0.6 percent, the tech-heavy Nasdaq Composite shed 0.8 percent and the S&P 500 gave up 0.7 percent.

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