Asian stocks fell on Friday, spooked by a fresh COVID-19 alert in Shanghai and Beijing, while Indonesian stocks took a hit after the world’s biggest palm oil exporter raised its maximum palm oil export tax.
Sentiment in the region soured on news of renewed curbs in China as new COVID cases emerged. Multiple districts in Beijing are shutting down entertainment venues, while most citizens in Shanghai are facing new rounds of mass testing to prevent a new outbreak.
Investors were also cautious ahead of US inflation data later in the day, which could guide the Federal Reserve’s policy tightening path.
Jakarta stocks fell 1.5 percent and were on track for a weekly fall after three consecutive weeks of gains.
Indonesia raised its maximum export tax for crude palm oil by 44 percent, but reductions in another levy are expected to reduce overall fees to send palm oil products overseas and encourage export shipments.
Stocks in Seoul also dropped over 1 percent and were set to close the week with their worst performance in nearly 5 months, weighed by rising inflation worries and a truckers strike that is threatening to severely curtail shipments of raw materials for semiconductors and petrochemical products.
Benchmark indexes in Malaysia, Singapore, Philippines, Taiwan and Thailand also fell between 0.5 percent and 3 percent.
The US Labor Department’s Consumer Price index is due later in the day and has kept market participants anxiously waiting for confirmation that decades-high inflation reached its summit in March and has started to ease.
“Peaking US inflation imaginably provides some relief from fears of an inadvertent policy-induced hard-landing from Fed oversteer,” Vishnu Varathan, head of economics and strategy at Mizuho Bank wrote.
“But this may be insufficient to override capital outflow risks associated with coincident out-run in EM Asia’s inflation eroding EM Asia’s real returns in EM Asia.” – Reuters
