HONG KONG (AFP) – Markets fell yesterday as China’s latest vows to boost the beleaguered economy failed to stir much excitement, while traders looked ahead to a key Federal Reserve policy meeting next week.
A tepid week was on course for a damp finish, with Wall Street offering a negative lead after fresh data pointing to a pick-up in inflation.
Hong Kong and Shanghai both tumbled as investors shrugged at Beijing’s pledge to introduce measures aimed at “lifting consumption vigorously” as part of a drive to reignite growth in the world’s number two economy.
President Xi Jinping and other key leaders said they would implement a “moderately loose” monetary policy, increase social financing and reduce interest rates “at the right time”.
The annual Central Economic Work Conference was being closely watched for signs of more stimulus, though the announcement – which included stabilising foreign trade and supporting the troubled property sector was unable to boost sentiment.
The gathering came after Beijing began unveiling in September a raft of policies to reverse a growth slump that has gripped the economy for almost two years.
Julian Evans-Pritchard of Capital Economics said it remained unclear how big a boost there would be, adding that, “while we may get a near-term stimulus bounce, we’re still not convinced that policy support will prevent the economy from slowing further next year”.
And strategists at Bank of America Global Research said: “We await more evidence of implementation to assess the impact of such an indicated turnaround”.
Shares fell in Tokyo even as the Bank of Japan’s closely watched Tankan survey indicated a slight increase in confidence among Japan’s major manufacturers.
Sydney, Taipei, Bangkok, Jakarta and Manila also dropped while Singapore, Mumbai and Wellington edged up.
Seoul reversed early losses to extend to four days a rebound from the selling sparked by South Korean President Yoon Suk Yeol’s brief martial law declaration, as the focus there turns to a second impeachment vote planned for today. The advance helped the Kospi briefly rise back above the level it sat at before Yoon’s December 3 shock.
All three main indexes in New York closed in the red, with investors taking to the sidelines ahead of the Fed’s Wednesday gathering, when it is tipped to cut borrowing costs for the third time.
However, there is growing concern that with inflation still above the bank’s target – and president-elect Donald Trump pledging to cut taxes and impose tariffs – officials will not make as many next year as initially hoped.