SINGAPORE- Asian equities fell sharply on Wednesday, led by Chinese stocks after a slew of data pointed to a patchy recovery in the world’s second-biggest economy, while the dollar was near a one-month high as traders dialed back bets of early interest rate cuts.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 1.8 percent , touching a fresh one-month low and on course for its steepest one-day percentage fall in over five months.
European stocks were set for a sharply lower open, with the Eurostoxx 50 futures down 0.67 percent , German DAX futures down 0.55 percent and FTSE futures 0.71 percent lower.
Investor focus during European hours will be on inflation data from Britain and euro zone that could influence the outlook for the central banks’ monetary policies.
Markets are pricing in 144 basis points (bps) of interest rate cuts from the European Central Bank and 123 bps of easing from the Bank of England this year.
In Asia, China stocks fell sharply after data showed China’s economy grew 5.2 percent in the fourth quarter from a year earlier, missing analysts’ expectations slightly but still ensuring Beijing met its annual growth target of around 5 percent .
Analysts said December indicators released along with the GDP data were more worrying, suggesting the country’s protracted property crisis is deepening while retail sales growth slowed and investment remained tepid. Only industrial output showed some signs of improvement.
“The series of China’s economic data releases today seem to reflect more of the same — an uneven growth environment, which does not offer much conviction of a sustained turnaround just yet,” said Jun Rong Yeap, a market strategist at IG in Singapore.
“The trend of weak economic data suggests that the accommodative policy environment has yet to translate to a sustained turnaround in economic conditions, which may amplify call for more supportive intervention by authorities in first half of 2024.”
China’s blue-chip stock index slipped 1 percent , hovering near the lowest level since early 2019. The index is down 5 percent in January after shedding 11 percent last year. Hong Kong’s Hang Seng index slumped 3 percent to its lowest since November 2022.
