Investing.com — Most Asian stocks fall Monday (NASDAQ:) China's new fiscal stimulus largely disappointed expectations, as data over the weekend showed the country remains deflated.
Regional markets shrugged off a strong lead from Wall Street to rise on Friday and remain at record highs amid persistent optimism about Donald Trump's inauguration as president.
U.S. stock index futures rose in Asian trading this week as all eyes were on upcoming inflation data and a number of Federal Reserve speakers.
Chinese stocks fall as fiscal stimulus has no effect
China's index fell by 0.6% and 0.2%, respectively, while Hong Kong's index fell by 2.4%, making it the worst performer in Asian markets.
Investors were largely disappointed after China's National People's Congress announced a roughly 10 trillion yuan ($1.4 trillion) debt exchange program to improve local government finances.
However, the lack of direct fiscal stimulus or targeted measures to improve the housing market and consumer spending, especially as data over the weekend showed that China's deflation continued into October. Investors were left wanting.
China's inflation rate slowed last month, marking the 25th consecutive month of contraction.
Analysts at ANZ said the lack of a direct stimulus package is likely to counter any potential headwinds from the change in US government following Trump's victory. President Trump has vowed to impose steep trade tariffs on China, which does not bode well for China.
This idea has also weighed on Chinese markets over the past week.
Uncertainty about Bank of Japan interest rate hike puts pressure on Japanese stocks
Uncertainty over interest rates weighed on Japan's stocks and indexes, each around 0.0%, after a summary of the Bank of Japan's October meeting showed that policymakers were divided on when to raise interest rates. ．It fell by 3%.
The Bank of Japan left interest rates unchanged in October after raising them twice earlier this year, citing a virtuous cycle of rising wages and inflation.
But the central bank's plans for further interest rate hikes have been thrown into doubt by heightened political uncertainty after the coalition government led by Japan's ruling Liberal Democratic Party lost its majority in parliament.
Still, Governor Kazuo Ueda suggested at the October meeting that interest rates are still expected to rise eventually.
The slump in the Chinese economy spread, and Asian markets as a whole fell. Australia fell 0.5%, weighed down by its exposure to China.
South Korea's index fell 0.9%, weighed down by a decline in tech stocks.
Indian index futures indicated a move towards flatness as the index languished near three-month lows. Indian stocks have been in turmoil over the past month due to heavy capital outflows from abroad.
India's statistics are expected to be released on Tuesday.
