Asian Stock Market: Trades lower on the downbeat Chinese data, risk-off mood

• Most Asian stock markets trade in negative territory on Wednesday.
• The Chinese Consumer Price Index (CPI) YoY fell 0.3% (July) from 0% prior, and -0.4% was expected.
• The Reserve Bank of India (RBI) is widely anticipated to hold the key interest rate at 6.5% on Thursday.

Most Asian stock markets trade in negative territory on Wednesday. Regional equities followed in the footsteps of Wall Street, which slumped after Moody’s downgraded the credit ratings of several midsize and small US lenders and issued a warning about possible cuts to the ratings of larger institutions.

At press time, the Nikkei drops 0.55%, Shanghai falls 0.36%, Hang Sang is down 0.06%, the Shenzhen Component Index falls 0.28%, the NIFTY 50 drops 0.28%, and the Kospi Index is up 1.32%.

In China, the latest data on Wednesday showed that the Chinese Consumer Price Index (CPI) YoY fell 0.3% in July from 0% prior, and the market consensus anticipated a -0.4% decline. Meanwhile, the Producer Price Index (PPI) declined 4.4% YoY, compared to the 4.1% decrease YoY expected and a 5.4% drop prior.

Earlier this week, the dollar value of China’s exports YoY in July plunged -14.5%, worse than expectations of -12.5% in June, and Imports dropped -12.4% YoY from -5%. The Chinese data fuels concern about the economic slowdown in the nation and pressures the government about the additional stimulus plan.

That said, the government will implement additional measures to boost consumer expenditure and enhance local liquidity. However, officials once again provided no significant details on the planned stimulus. The government's lack of specific plans has dampened investor expectations.

On the Indian front, the Reserve Bank of India (RBI) monetary policy meeting is scheduled for Tuesday to Thursday, and the policy decision will be announced on Thursday. Markets anticipate that the central bank may maintain the repo rate to sustain economic growth momentum. It’s worth noting that the RBI has held the repo rate at 6.5% since February, when it was raised from 6.25% in May of last year. Additionally, the Indian Consumer Price Index (CPI) for July and Industrial Production for June will be released on Friday.

Looking ahead, market participants await the Indian Consumer Price Index (CPI) for July, and Industrial Production for June, due on Friday. Also, the inflation data from the US. The economic data could give direction to riskier assets like gold, equities, the AUD/USD, etc.