Investing.com — Asian stocks mostly fell on Monday ahead of the US Federal Reserve's interest rate decision this week, while Chinese stocks fell as weaker-than-expected retail sales data raised fresh concerns about the pace of recovery in the world's second-largest economy.
The US Federal Reserve is set to decide its significance on Wednesday, with a 25 basis point cut largely priced in. However, markets were cautious about the Fed's long-term interest rate path as inflation remained a major concern.
Chinese stocks reverse course after retail sales data
China erased early gains to fall by 0.1%, while the index fell by 0.4%. The Hong Kong index fell by 0.8%.
Data on Monday showed that China's economy grew as expected in November as recent stimulus measures from Beijing supported business activity.
However, it came in below expectations, reflecting continued weakness in consumer spending despite policy support.
Weak retail numbers dampened sentiment across Asian markets, reaffirming fears of an uneven recovery in the Chinese economy while reinforcing the dovish tone globally as markets await clarity from the Federal Reserve.
Asian stocks decline ahead of the Fed and Bank of Japan meeting
Japan was largely unchanged and fell slightly ahead of the Bank of Japan meeting scheduled for next week.
The Bank of Japan is expected to maintain current interest rates this week, as officials seek more time to assess global risks and the outlook for wage growth in 2024. This is in contrast to previous expectations of a rate hike.
Other data showed that the Japanese economy contracted for the sixth month in a row amid weak demand, while gains extended in December.
Shares in South Korea's index were largely unchanged after the country's President Yoon Suk-yeol was impeached in a second vote by the opposition-led parliament on Saturday, over his attempt to impose martial law in the country.
South Korea's Ministry of Finance pledged on Sunday to continue implementing market stabilization measures as quickly as needed to support the economy after its isolation.
Globally, investors were cautious ahead of the Fed meeting. The Fed is expected to cut interest rates by 25 basis points, however, flat inflation figures released last week have cast a shadow over the central bank's long-term interest rate outlook.
Elsewhere, Australia lost 0.3%, while Indonesia fell 0.9%.
The Indian index indicated a slight rise at the open on Monday, while the Malaysian index rose by 0.2%.
