Asian stocks fall on inflation jitters, China buoyed by more stimulus

Most Asian stocks declined on Wednesday due to ongoing concerns that persistent inflation will compel major central banks to maintain high interest rates for an extended period.

Chinese markets were a notable exception, posting slight gains after the government introduced additional measures to support the struggling property sector.

Regional stocks received mixed signals from Wall Street overnight. The main boost came from a rally in NVIDIA Corporation (NASDAQ

), which propelled the NASDAQ Composite to record highs. However, broader U.S. stocks remained subdued in anticipation of key inflation data due later this week. Additionally, Federal Reserve officials continued their hawkish commentary on interest rates.

U.S. stock index futures remained flat during Asian trading.

Australia Drops on Inflation Shock, RBA Concerns

Australia’s ASX 200 index was among the worst performers in Asia, falling 1% after consumer price index data for April showed stronger-than-expected inflation.

This marked the second consecutive month of rising inflation, raising concerns about a more hawkish stance from the Reserve Bank of Australia (RBA). Persistent inflation could compel the RBA to keep rates high for longer or even increase them further this year as it strives to curb inflation.

The central bank had considered a rate hike in its May meeting and indicated that it would not rule out any measures to tackle persistent inflation.

Japanese Stocks Hit by Mixed BOJ Signals

Japan’s Nikkei 225 index fell 0.3%, while the broader TOPIX index dropped 0.5% on Wednesday.

Bank of Japan (BOJ) member Adachi Seiji warned that excessive declines in the yen could lead to policy tightening by the central bank, especially if it affected inflation.

Adachi also predicted that inflation would rise in the summer-autumn period and that the BOJ would gradually phase out its stimulative asset purchase programs. However, he cautioned against rapid interest rate hikes due to risks to Japan’s economy and emphasized the need to maintain accommodative policy in the near term.

Broader Asian Markets Retreat

Broader Asian markets also retreated as investors anticipated further cues on U.S. inflation and interest rates, which dampened sentiment.

South Korea’s KOSPI fell 0.9%, while futures for India’s Nifty 50 index pointed to a negative opening, with the index set for more profit-taking after hitting record highs earlier this week.

Hong Kong’s Hang Seng index slid nearly 1% due to profit-taking in technology stocks, which offset gains in the property sector.

Chinese Stocks Gain on Property Support

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were the only gainers in Asia on Wednesday, rising 0.5% and 0.4%, respectively.

Several major Chinese cities, including Shanghai and Shenzhen, were seen further easing restrictions on home buying and lending requirements for property investments.

These measures come just weeks after Beijing announced a series of supportive actions for the property market, which has been a significant concern for the Chinese economy.