Asia stocks fall ahead of Fed meet, China shares slump as CEWC updates disappoint

Investing.com-- Asian stocks fell sharply on Friday tracking overnight losses on the Wall Street, while Chinese shares slumped as policy updates from a high-profile legislative meeting failed to deliver large-scale economic stimulus as expected.

U.S stock indexes closed lower overnight as investors squared their positions before the U.S. federal Reserve meeting due next week, although a 25 basis point rate cut was largely expected. Wall Street futures were largely steady in Asia hours.

China stocks decline as CEWC underwhelms on stimulus

China’s Shanghai Composite index fell 1.8%, while the Shanghai Shenzhen CSI 300 index declined 2%. Hong Kong’s Hang Seng index slumped 1.9%, with the three largely lagging their Asian peers.

Investors were disappointed by the a of aggressive stimulus measures following updates from China’s Central Economic Work Conference (CEWC), a two-day meeting which concluded on Thursday.

“Both the Politburo and CEWC look more like a policy recap of the stimulus measures in the past months rather than a new supporting deal to the economy. Most policy options have already been implemented or discussed by ministries at previous press briefings, and the question on the stimulus ahead will not be ‘what’, but ‘how much’,” ANZ analysts said in a note.

A state media readout from showed that China has pledged to boost its budget deficit, increase debt issuance, and ease monetary policy to sustain economic growth amid anticipated trade tensions with the U.S. But markets saw the policies unlikely to provide the immediate economic momentum needed to counteract China's deflationary pressures.

At the CEWC, Beijing sets targets for economic growth, the budget deficit, debt issuance and other variables for the year ahead. The targets are agreed at the meeting, but won't be officially released until an annual parliament meeting in March.

Asia shares under pressure ahead of Fed, BOJ meetings

Japan’s Nikkei 225 fell 1.3%, and TOPIX declined 1.4% ahead of the Bank Japan’s policy meeting due next week.

The central bank is leaning toward maintaining its current interest rates next week, as officials seek more time to evaluate global risks and the outlook for wage growth in 2024, Reuters reported on Thursday.

Globally, investors were cautious ahead of next week's Fed meeting. The Fed is expected to lower interest rates by 25 basis points next week, however, higher-than-anticipated producer price index and largely in-line consumer inflation figures released this week, have clouded the central bank’s long term rate outlook.

Australia’s S&P/ASX 200 lost 0.7%, while Indonesia’s Jakarta Stock Exchange Composite Index dropped 0.3%.

Bucking the regional trend, shares in South Korea’s KOSPI index inched 0.3% higher, ahead of a planned parliamentary vote to impeach country’s President Yoon Suk Yeol.

On December 3, President Yoon briefly imposed martial rule in South Korea, only to reverse the decision within hours. This led to a criminal investigation against Yoon amid demands to remove him from power.

Elsewhere, India’s Nifty 50 Futures indicated a muted open on Friday, while Malaysia’s FTSE Malaysia KLCI index edged up 0.3%.