China stocks fall, led by tech, as US inflation stokes Fed fears

SHANGHAI: China stocks fell on Thursday, tracking broad weakness in global markets, as technology shares led declines after stronger-than-expected US inflation data fueled concerns that interest rates could remain higher for longer.  

As of the midday break, both the Shanghai Composite index and the blue-chip CSI300 index dropped 2%.

The tech-focused STAR50 Index plunged 3%, while the startup board ChiNext Composite Index fell 3.4%.

“The recent pullback seems to be driven more by a concentrated unwinding of elevated tech crowding, while mutual funds also face pressure related to break-even redemptions,” said Lei Meng, China equity strategist at UBS Securities.

“Geopolitics, US Treasury yields and oil-price volatility have contributed to tighter dollar liquidity due to their impact on inflation expectations, weighing on market risk appetite.”

The dollar rose while Wall Street stocks fell after data showed US consumer prices rose more than expected last month, briefly reviving bets the Federal Reserve may raise interest rates.

“The main theme overnight was a hotter-than-expected US inflation print which reignited Fed rate hike fears,” analysts at Commerzbank said in a note.

Meanwhile, investors are also turning their attention to China’s third-quarter gross domestic product data release due on Monday for fresh clues on the strength of the economic recovery following a string of upbeat data ranging from trade to credit lending.

The International Monetary Fund on Thursday projected Asia’s economic growth would moderate next year and warned of heightening risks from the Iran war-induced energy shock, a potential correction in the AI boom and spillovers from rising global bond yields.

In Hong Kong, the benchmark Hang Seng index fell 1.5%, while the city’s tech shares lost 2.9%.

Hong Kong shares of Alibaba slumped 4.8%.