Asian stocks weaken as China's factory-gate prices fall sharply

Most Asian stocks swung lower on Tuesday, weighed by Chinese markets after mainland factory-gate prices shrank at their fastest pace in three years while reports of German stimulus plans pushed global bond prices down, reports Reuters.

China’s producer price index fell 0.8 per cent in August year-on-year, official data showed on Tuesday, its sharpest decline since August 2016 as flagging demand at home and abroad forced some businesses to slash prices.

The data pushed blue chip shares in China .CSI300 down 0.41 per cent, which in turn drove an index of Asian stocks outside of Japan .MIAPJ0000PUS 0.23 per cent lower, having traded flat earlier in the session.

That set the tone for early European trade with the pan-region Euro Stoxx 50 futures STXEc1 down 0.09 per cent, German DAX futures FDXc1 off 0.12 per cent, and FTSE futures FFIc1 0.09 per cent lower.

“Globally inflationary pressure remains subdued, so in that sense China is not an outlier,” said Sean Darby, global equity strategist at Jefferies in Hong Kong.

“People are positioned very bearish, but I don’t think the market wants to be too bearish. Bond yields are reversing. Markets are a little more unsure about their expectations for central banks, because a lot of easing is already priced in.”