Japan’s Nikkei index leads losses in Asian markets amid the Israel-Hamas tensions

• Asian equities trade in negative territory amid the cautious mood.
• Chinese central bank maintained the one-year Medium-term Lending Facility (MLF) rate unchanged at 2.50%.
• Japan’s Nikkei index is the worst performer ahead of the inflation data.
• The Chinese growth number (Q3), Industrial Production, and Retail Sales on Wednesday will be closely watched events.

Most Asian stocks trade lower on Monday as investors turn cautious amid the escalating geopolitical tensions between Israel and Hamas. Japan’s Nikkei index leads losses ahead of the key inflation data on Friday.

The conflict in the Middle East exerts some selling pressure on the regional stock markets. Israeli Prime Minister Benjamin Netanyahu stated on Sunday that he vowed to "demolish Hamas" as his military got ready ground operations in Gaza to root out the militant group. US President Joe Biden has called for civilian protection, and the US has been working to alleviate food, water, and petroleum shortages. Apart from this, the upbeat inflation US data last week raised concerns about the potential rate hikes by the Federal Reserve (Fed).

At press time, China’s Shanghai drops 0.40% to 3,075, the Shenzhen Component Index falls 0.99% to 9,969, Hong Kong’s Hang Sang is down 0.37% to 17,745, South Korea’s Kospi dips 1.24% and Japan’s Nikkei falls 1.80%.

In China, the People’s Bank of China (PBOC) maintained the one-year Medium-term Lending Facility (MLF) rate unchanged at 2.50% on Monday. While the central bank kept the seven-day reverse repo rate unadjusted at 1.80%.

Additionally, PBoC Governor Pan Gongsheng stated at the International Monetary Fund meeting in Morocco that authorities vowed to provide more substantial support to the real economy

The National Bureau of Statistics of China showed on Friday that the Chinese Consumer Price Index (CPI) for September came in at 0% YoY versus 0.1% prior, below the market consensus of 0.2%. Meanwhile, the Producer Price Index (PPI) dropped to 2.5% from a 3% fall in August, missing the expectation of a 2.4% decline. Investors await the key Chinese economic data later this week for fresh impetus. China’s Gross Domestic Product (GDP) for the third quarter, Industrial Production, and Retail Sales will be released on Wednesday.

In Japan, the fear of additional interest rates raised by the Fed exerts pressure on the Japanese Yen (JPY). Market players also turn to a cautious mood ahead of the release of Japan’s National Consumer Price Index for September due on Friday. Any indications of persistent inflation might convince the Bank of Japan (BoJ) to further tighten monetary policy.

Looking ahead, market participants will monitor the US Retail Sales due on Tuesday. The attention will shift to the Chinese growth number for the third quarter (Q3), Industrial Production, and Retail Sales on Wednesday. On Friday, the Japanese inflation data will be released.