After rising broadly on Wednesday, Asian stocks inched down on Thursday after Chinese data showed weaker than expected results in multiple verticals. China’s factory output, retail sales and fixed-asset investments all grew less than expected, creating a question as to whether China’s economy may be floundering due to increased borrowing costs.
The competitive edge for Asian economies which is built around low-cost labor and exports for growth is also being challenged as technology changes the way manufacturers operate, a new report from Boston Consulting Group suggested. Some large companies such as Adidas and Foxconn have already moved their manufacturing out of China in favor of closer production. Also challenging China’s production industry is the narrowing wage gap as wage increases outpace productivity, closing the wage gaps between China and the United States.
Both the ASX 200 and the Shanghai composite were down 0.17 percent as of 12:47 p.m. HK/SIN. South Korea’s Kospi bucked the trend, trading up 0.21 percent at the same time. The struggle of Asian markets on Thursday morning comes after Wall Street closed a second day with record highs, despite Apple’s 0.8 percent price drop.
The S&P 500 closed up 0.08 percent, the Dow Jones Industrial Average gained 0.18 percent and the Nasdaq Composite gained 0.09 percent on the day. The S&P 500 also posted 31 new 52-week highs and the Nasdaq Composite enjoyed 103 new highs on Wednesday.
Currency markets were fairly stable near midday on Thursday, with the euro gaining 0.07 percent against the dollar to trade at $1.1877. The dollar was down a modest 0.03 percent against the yen, trading at 110.44 and managing to maintain its distance from the ten-month low hit last week in the wake of hurricanes Irma and Harvey. U.S. inflation data is due out later today and will be seen as a forecast for when the Federal Reserve will next raise interest rates. Analysts are expecting inflation reports to foreshadow the next rate hike in 2018, not this year as originally expected.