Asia Markets

Asian stocks deflated by soft China inflation data

A man stands in front of an electronic board displaying share prices at a securities exchange house in Shanghai, China.
Qilai Shen | Bloomberg via Getty Images

Asian shares declined on Tuesday after data showed consumer inflation in China cooled more than expected last month, adding to concerns about the health of the world's second-biggest economy.

China's consumer price index (CPI) rose 1.6 percent in September from a year earlier, against forecasts of a 1.8 percent rise from a Reuters poll and following August's 2 percent gain.

The producer price index (PPI) fell 5.9 percent, in line with expectations and after a 5.9 percent fall in the previous month. The PPI, which measures wholesale prices, clocked its 43rd straight month of decline.

The raft of inflation data follows official data released on Tuesday that showed the country's dollar-denominated imports plunged 20.4 percent in September to chalk up the 11th consecutive month of decline, while exports fell 3.7 percent from a year earlier.

"The positive emerging price pressures seen in the August data are increasingly looking like a one-off. Food and consumer goods prices eased noticeably from August, which is a negative for Chinese consumption – one of the bright spots in China's slowing economy. This slowdown was further emphasised in the Core CPI number (ex-food and energy) which slowed to its weakest reading since May," IG's market analyst Angus Nicholson wrote in a note released Wednesday.

Shares were also dampened by a sizeable retreat in oil-related counters, as oversupply concerns weighed on energy prices. In early Asian trade, front-month Brent for November delivery ticked up 0.2 percent to $49.34 a barrel, while U.S. crude added 0.4 percent, to $46.85 a barrel.

Meanwhile, major U.S. averages fell overnight as investors weighed slight declines in oil prices and further indications of a persistent slowdown in China's economy. The blue-chip Dow Jones Industrial Average broke a seven-day winning streak by ending down 0.3 percent. The S&P 500 and Nasdaq Composite closed down 0.7 and 0.9 percent respectively.

China stocks lower

China's share markets slid into negative territory in the afternoon trading session, with the Shanghai Composite ending down 1 percent.

Hopes for further stimulus had earlier lifted the Shanghai index out of the red, but the typical "bad news is good news" upturn proved to be short-lived.

"Today's Chinese CPI data essentially guaranteed further cuts to the interest rate and the reserve requirement ratio (RRR) before the year is out. But, China has already eased monetary policy significantly and stepped up its fiscal spending, any rally based on a further increase seems inevitably short-lived," IG's Nicholson explained.

The benchmark CSI300 Index also surrendered earlier gains to close down 1.1 percent. Among small-caps, the Shenzhen Composite dropped 1.2 percent, while the start-up ChiNext board widened losses to 1.5 percent.

Hong Kong's Hang Seng index extended losses, down 0.7 percent, with financials and property developers among the hardest-hit.

Tracking Beijing's dizzying array of interventions

Nikkei skids 1.9%

Japan's Nikkei 225 index was one of the biggest laggards in the region on Wednesday, but managed to come off the day's lows in the final minutes of trading.

Earlier in the session, the Tokyo bourse crashed more than 2 percent to an intra-day low of 17,831, with export-oriented counters among the worst-hit due to renewed strength in the yen.

Dollar-yen last traded at 119.63, as the greenback pulled back amid heightening bets that the Federal Reserve may not raise short-term interest rates until 2016.

Carmakers such as Toyota Motor, Nissan, Suzuki Motor and Honda fell between 1.8 and 2.7 percent, while Komatsu - a construction equipment maker with heavy exposure to China - slumped 3.4 percent.

Nikon tumbled 5.3 percent after the Nikkei business daily reported that the company's April-September operating profit likely fell 27 percent to 9.5 billion yen as digital camera sales missed expectations.

Energy plays Inpex and JX Holdings shaved off 2.7 and 1.7 percent respectively, while steel producers were stung by China-related woes, with JFE Holdings and Nippon Steel and Sumitomo Metal down more than 5 percent each.

Defying the downturn, movie firm Toho surged 3.9 percent following the release of strong earnings guidance on Tuesday.

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ASX dips 0.1%

Australia's index logged a three-session losing streak amid intensifying worries about its top export market, China.

Among casualties in the resources sector, Santos, Woodside Petroleum and Oil Search slumped between 1.6 and 6.8 percent. Fortescue Metals closed down 1.4 percent, while bigger rivals BHP Billiton and Rio Tinto receded 0.7 percent each.

Major lenders found some reprieve after enduring choppy trade throughout the session on the back of news that Westpac will raise A$3.5 billion ($2.54 billion) to meet new capital rules sparked initial selling in banking shares.

Commonwealth Bank of Australia and Australia and New Zealand Banking nudged up about half a percent each, while National Australia Bank gained 0.9 percent. Trading in Westpac shares has been halted and is expected to recommence next Monday.

Bucking the downtrend, Domino's Pizza soared 6.9 percent after the company said it will be enlarging its ambitions in France through the acquisition of Pizza Sprint for around A$55.2 million.

In other corporate news, Treasury Wine Estates said on Wednesday it had agreed to buy the majority of Diageo's U.S. and British wine operations for $552 million, while announcing a fully underwritten rights issue to raise around A$486 million to fund the acquisition. Shares of the wine maker are halted for trade following the announcement.

Kospi sags 0.5%

South Korea's Kospi index notched down, with oil-related names battered by falling energy prices.

Refiners SK Innovation and S-Oil extended Tuesday's sharp losses, tumbling 3.1 and 4.3 percent respectively. LG Chem plummeted nearly 5 percent, while utility Kepco plunged 3.1 percent.

Brokerages were also sold off; Daewoo Securities and Samsung Securities fell 3.2 and 2.7 percent respectively.

Among winners which helped to limit the bourse's losses, retailer Shinsegae and cosmetics maker AmorePacific rose more than 1 percent each.

Singapore's Q3 GDP surprises on upside

STI slips 0.2%

Singapore's benchmark Straits Times index reversed course to slip below the key psychological support level of 3,000 points. The index closed down 0.03 percent.

Prior to the market open, advanced gross domestic product (GDP) showed the Southeast Asian economy narrowly avoiding a technical recession. The economy grew 0.1 percent from the previous three months in the third quarter, slightly beating expectations for a narrow contraction of 0.1 percent.

On a year-on-year basis, Singapore expanded 1.4 percent, also slightly better than market consensus for a 1.3 percent rise.

However, the Monetary Authority of Singapore (MAS) reduced the rate of appreciation for the Singapore dollar even as it maintained its policy of "modest and gradual appreciation" for the currency. Rather than use interest rates, Singapore's central bankmanages its monetary policy by adjusting an undisclosed tradingband based on a basket of currencies weighted to reflect tradelevels with the city-state.

The Singdollar climbed despite the decision, with the U.S. dollar fetching as little as 1.3930 Singapore dollars, compared with around 1.4023 Singapore dollars before the data release and the MAS announcement.

Markets in Indonesia and Malaysia are closed for public holidays.

— CNBC's Ansuya Harjani and Leslie Shaffer contributed to this market report