Asia stocks slip on weak China data; Ukraine woes, inflation hit currencies

3 minute read
Register now for FREE unlimited access to Reuters.com
  • Philippine peso at near 3-year low
  • Chinese stocks down 2.6%
  • High oil prices stoke inflation fears

March 14 (Reuters) - Most Asian currencies and stock markets were in the red on Monday, hit by concerns over the escalating Russia-Ukraine crisis and a drop in China's new bank loans, with Philippine stocks plunging more than 4%.

The Philippine benchmark index (.PSI) slid to a five-month low, while the peso weakened 0.3% to a near three-year low.

Stock markets in China (.SSEC) shed 2.6%, as outlook for the region's largest economy was hampered by new local symptomatic COVID-19 cases rising to a two-year high, and data showing a contraction in new bank loans.

Register now for FREE unlimited access to Reuters.com

Stock markets in Singapore (.STI) and Malaysia (.KSLE) also fell about 0.6% and 0.4%, respectively.

China's cyberspace regulator also released draft measures aimed at protecting minors, including requiring online media firms to set up a "youth mode" with only "clean" content suitable for minors, the latest in a series of actions by the government to combat gaming and internet addiction among its youth. read more

Thailand's baht also dipped 0.5%, to be among the top losers in the region, partially due to rising COVID-19 cases in China, a major source of tourist inflows, hampering prospects for the industry.

Poon Panichpibool, a markets strategist at Krung Thai Bank, said profit-taking by Japanese firms in Thailand ahead of the financial year-end by selling their baht for yen also weighed on the Thai currency.

Currencies across the region were bracing for even higher inflation as commodity prices, including crude oil, have soared since Russia's invasion of Ukraine.

Crude oil, which has fallen over the last few sessions, still remains near $110/barrel, a level high enough to sound the alarm bells on cost-pull inflation.

Wholesale price-based inflation in India also beat market forecasts, amid higher fuel prices in February. read more

Several central banks in the region have warned of this being a headwind to economic growth.

The rupee was largely flat through the session.

Analysts at Morgan Stanley, however, expect the Indonesian rupiah to outperform in the wake of higher commodity prices given the country's status as a net commodity exporter. The rupiah, down 0.2% today, has gained 0.3% since Russia invaded Ukraine, outperforming many of its regional peers.

The impending interest rate hike by the U.S. Federal Reserve, which has taken a backseat since geopolitical tensions took centrestage, came back into focus with the rate decision due late on Wednesday.

While markets have largely priced in a 25 basis point federal funds rate hike, the central bank's commentary on inflation and further rate hikes will be closely watched, especially after added uncertainly from a higher-than-expected U.S. inflation number on Friday. read more

HIGHLIGHTS:

** Indonesia bond yields shed 8 basis points to 6.723%

** Property developer Ayala Land (ALI.PS) sheds 7.6% to be the top loser among Philippine stocks

Register now for FREE unlimited access to Reuters.com
Reporting by Harshita Swaminathan; Editing by Rashmi Aich

Our Standards: The Thomson Reuters Trust Principles.