China stocks fall, led by tech, as US inflation stokes Fed fears
Chinese equities fell on Thursday, tracking broad weakness in global markets, after stronger-than-expected US inflation data fuelled concerns that interest rates could remain higher for longer. By the midday break, the Shanghai Composite and the blue-chip CSI300 had each dropped 2%, while the tech-focused STAR50 Index fell 3% and the ChiNext Composite Index lost 3.4%.
UBS Securities China equity strategist Lei Meng attributed the pullback chiefly to a "concentrated unwinding of elevated tech crowding", adding that mutual funds were also under pressure related to break-even redemptions. Geopolitics, US Treasury yields and oil-price volatility had contributed to tighter dollar liquidity through their impact on inflation expectations, weighing on market risk appetite, Meng said.
The dollar rose and Wall Street stocks fell after the US data showed consumer prices rose more than expected last month, briefly reviving bets that the Federal Reserve may raise interest rates. Commerzbank analysts described the "hotter-than-expected US inflation print" as the main overnight theme, saying it had reignited Fed rate-hike fears.
In Hong Kong, the benchmark Hang Seng index fell 1.5% and the city's tech shares lost 2.9%, with Alibaba's Hong Kong shares down 4.8%. Investors are also turning their attention to China's third-quarter gross domestic product data, 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.
