The major Asia-Pacific stock indexes settled lower on Tuesday As investors reacted to disappointing Chinese inflation data for April. Shares were also pressured by growing worries about a second wave of coronavirus infections after the Chinese city where the pandemic originated reported its first new cases since is lockdown was lifted.
On Tuesday, Japan’s Nikkei 225 Index settled at 20366.48, down 24.18 or -0.12%. Hong Kong’s Hang Seng Index closed at 24245.18, down 356.88 or -1.45 % and South Korea’s KOSPI Index finished at 1922.17, down 13.23 or -0.68%.
China’s Shanghai Index settled at 2891.56, down 3.25 or -0.11% and Australia’s S&P/ASX 200 Index closed at 5403.00, down 58.20 or -1.07%.
China Factory Prices Plunge as Virus Hits Demand
China’s factory-gate prices fell to a four-year low, official data showed Tuesday, with firms suffering from the economic devastation unleashed by the coronavirus on the global economy.
The Producer Price Index (PPI) – which reflects what factories charge wholesalers – dropped again, fueling concern among analysts about the post-pandemic recovery in the world’s second-largest economy.
The PPI plunged 3.1% on-year in April – a 1.3% monthly drop compared with March – according to China’s National Bureau of Statistics. The slump in the PPI was the steepest monthly drop since the Global Financial Crisis of 2007-08.
The April drop was more severe than the 2.5% decline forecast by analysts, highlighting the continued stress on industries as they resume production after the economy was almost completely shut down at the height of the outbreak in China.
The Consumer Price Index (CPI), on the other hand, grew 3.3% in April, but less than the 3.7% forecast in a Bloomberg poll of analysts. That was the slowest pace since last September when inflation rose 3%.
Asian Shares Falter as Anxiety Grows Over Second Coronavirus Wave
The central Chinese city of Wuhan reported five new cases on Monday, casting doubts over efforts to lower coronavirus-related restrictions across the country as businesses restart and individuals went back to work.
The worrisome news follows a fresh outbreak in night clubs in South Korea and record number of new cases in a day in Russia.
“The re-opening of the global economy will likely follow the shape of activity in China. Businesses there have restarted operations but are not necessarily at capacity,” Bob Baur, Chief Global Economist at Principal Global Investors said.
“While businesses have mostly restarted, China’s households stay cautious. Restaurants are open, but seats are empty. Vehicle sales bounced off the bottom but are well below normal. Households in the U.S. and Europe will surely mirror this wary attitude even as activity picks up.”
This article was originally posted on FX Empire