China reopening offers little help as Asian stocks sink on growth fears By Investing.com

By Ambar Warrick

Investing.com– Most Asian stock markets retreated on Wednesday as concerns over a global recession and interest rate hikes by the Federal Reserve eroded sentiment, with the scaling back of anti-COVID curbs in China doing little to deter selling pressure.

China’s index fell 0.6%, while the index lost 0.7%. But while China outlined plans to relax its zero-COVID policy, the economic repercussions of the policy continued to weigh. Chinese and sank to their weakest level since mid-2020, data showed on Wednesday.

Beijing announced a further scaling back of COVID-related restrictions on Wednesday, including relaxed curbs on movement and business activities. The move comes after several major cities began easing curbs in the face of unprecedented protests against the government’s strict zero-COVID policy.

Still, the country faces its worst outbreak yet in terms of infections, with analysts forecasting near-term volatility in local markets as COVID cases increase.

Chinese technology stocks also took little relief from the to place strict controls on semiconductor sales to the country. Hong Kong’s index sank 0.7%, while the index, which is heavily exposed to China, lost 0.7%.

Broader sentiment towards Asian stocks remained weak, especially after warned of a potential recession in 2023. The warning severely dented sentiment towards risk-driven assets, also dragging .

Some stronger-than-expected U.S. data released this week also drove concerns that will remain stubbornly high in the coming months, inviting more interest rate hikes by the .

While the central bank is expected to hike rates by a next week, it has warned that sticky inflation will see borrowing costs peak at much higher levels.

Rising interest rates were the biggest weight on Asian stocks this year, and are expected to limit gains in the coming months.

India’s and indexes fell 0.3% after the to an over three-year high, and signaled more hawkish moves to control inflation.

Japan’s index sank 0.7%, while led losses across Southeast Asia with a 1% drop.

Australia’s index slumped nearly 0.9% amid growing signs that a post-COVID economic boom in the country appeared to be running out of steam. The country’s grew less than expected, data showed on Wednesday.