Most Asian equities were under pressure on Wednesday, while currencies traded largely steady, as investors awaited further policy cues from China and the crucial U.S. inflation data to gain insights into the central bank’s rate-cut trajectory.
Equities in Malaysia declined 0.4% while those in Singapore and the Philippines fell 0.5% and 0.4%, respectively.
Investors await more detailed measures from China from the annual Central Economic Work Conference (CEWC) this week, after the world’s second-largest economy pledged to boost consumption and ease its monetary policy.
“Should the Chinese authority uplift optimism over economic growth and incoming stimulus, I think it could boost Chinese equities and Chinese yuan in the near term,” said Poon Panichpibool, a markets strategist at Krung Thai Bank.
“With stronger Chinese yuan, it is possible to see some positive effect towards other EM Asia FXs as well.”
The Chinese yuan was largely unchanged, while stocks climbed 0.2%.
Data on Tuesday signalled that exports from China slowed sharply and imports unexpectedly shrank in November, pointing towards economic weakness in the region’s top trading partner amid threats of fresh U.S. tariffs.
Currencies were largely muted, while the Philippines peso and the Indonesian rupiah declined 0.3% and 0.2%, respectively.
Attention is also on the U.S. inflation report, due later in the day, which will offer insights into the Federal Reserve’s rate-cut path ahead of its policy meeting this month.
Asia stocks slugged by South Korea turmoil, China disinflation
An in-line inflation reading is unlikely to move the market significantly, but if headline and core inflation exceed expectations, it would be negative for emerging market currencies, according to Krung Thai Bank’s Panichpibool.
In Asia, shares in South Korea rose 0.7%, aiming to extend their gains for a second consecutive day, after both stocks and the won came under pressure due to political uncertainty following the failed impeachment attempt on President against President Yoon Suk Yeol. The won edged 0.1% higher on Wednesday.
“We expect short-term pressures on KRW (the won) to remain,” analysts at Maybank said in a note.
The Taiwanese dollar weakened 0.2% while shares retreated 0.6%.
Investors maintained a cautious stance after Taiwan’s defence ministry reported a spike in Chinese military activity around the island, including 53 military aircraft, with the country on high alert over Beijing’s latest pressure campaign.
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