China stocks drive Asia lower ahead of Fed

The sell-off in the Chinese equities extended for the second straight session this Tuesday, driving rest of Asia in the red zone, with investors now keeping an eye on the PBOC tightening measures and FOMC 2-day meeting, which begins today.

The Asian indices traded with moderate losses, as upbeat Chinese industrial production and retail sales data failed to lift the sentiment around the Chinese equity markets.

The Chinese benchmark index, Shanghai Composite extended losses after markets believed that better Chinese fundamentals will lead the Chinese authorities to switch their focus from stimulus to curbing financial risks, including higher money market rates and limits on using bonds to borrow.

While a relatively stronger yen weighed on the exports-oriented stocks, and dragged the region’s indices lower. Meanwhile, the USD/JPY pair now trades muted around 115 handle, retreating sharply from multi-month tops of 116.12 reached a day before.

Meanwhile, Japan’s Nikkei 225 drops -0.19% to 19,119, the Australian S&P/ASX 200 declines -0.31% to 5,545. The Chinese equities extend the downside, with the benchmark Shanghai Composite index dropping -0.82%, while CSI300 index also skids -1%. Hong Kong markets slip -0.49% to 22,320 levels.