Asian Markets Fluctuate as Concerns Over China Weigh on Sentiment Before Fed Meeting

In today’s trading, Asian markets still showed volatility, impacted by concerns over China’s economic health and uncertainty surrounding upcoming central bank decisions. With the US Federal Reserve expected to announce its interest rate decision soon, investors are on edge about the potential changes in monetary policy. 

This uncertainty was driven by the weaker-than-expected data from China, which showed declines in retail sales, industrial production, and house prices. These figures heightened worries that China’s recent policy measures have yet to impact stimulating its economy significantly. 

China’s stock market was closed, and the offshore yuan weakened to around 7.10 per dollar, driven by the disappointing economic data. Industrial output retail trade, and fixed investment all showed declines, while the unemployment rate increased. 

Additionally, foreign direct investment dropped sharply by 31.5% year-on-year during the first eight months of 2024. Home prices in 70 cities declined 5.3% in August compared to the previous year, continuing a downward trend. Markets are now focused on the People’s Bank of China’s upcoming decision on key lending rates, particularly the 1-year and 5-year loan prime rates​.

Hong Kong’s Hang Seng Index dropped 0.6% to 17,271.92, while other Asian markets such as Singapore and Wellington also saw declines. However, some markets like Sydney and Manila managed to get small gains, reflecting mixed sentiment across the region. 

Meanwhile, the Japanese stock market is closed for Respect for the Aged Day. Japanese shares ended significantly lower on Friday.

On the other hand, the yen strengthened, hitting its highest level since December, ahead of the Bank of Japan’s meeting later this week. Investors are also watching the impact of high inflation in Japan and any potential policy changes from the central bank.