Investing.com– Most Asian stocks fell on Friday as a rally on signs of cooling U.S. inflation wound down, with focus now turning to a Bank of Japan meeting where the central bank is widely expected to further tighten policy.
Chinese markets were the worst performers for the day, hit by new European Union tariffs against the country’s major electric vehicle makers. Fears of retaliatory measures from Beijing also dampened sentiment.
Regional markets took middling cues from Wall Street. While gains in technology stocks still saw the and hit record highs for a fourth consecutive session, broader sectors were subdued even as factory inflation data unexpectedly shrank in May.
U.S. stock index futures were muted in Asian trade.
Japanese stocks flat, BOJ tightening in focus
Japan’s and indexes moved in a tight range on Friday, with focus turning squarely towards the conclusion of a BOJ meeting later in the day.
The BOJ is expected to steady after a historical hike in March. But it is also set to tighten policy further by scaling back its pace of bond purchases.
Markets were waiting to see just how much the BOJ would reduce its bond purchases, given that recent weakness in the Japanese economy gives the central bank limited headroom to tighten policy.
But any further tightening in policy presents headwinds to Japanese stocks, which had until this year benefited from the BOJ’s ultra-loose stance.
Chinese stocks hit by tariff jitters
China’s and indexes fell 0.6% and 0.4%, respectively, while Hong Kong’s index lost 0.6%.
Chinese bourses saw extended selling after the EU unveiled steep tariffs of between 17% to 30% on the import of Chinese electric vehicles. SAIC Motor Corp Ltd (SS:) was the worst hit, facing the steepest trade duties among its peers.
The EU trailed the U.S. in imposing tariffs on China’s fast-growing EV sector. But unlike the U.S., the EU does represent a major market for Chinese EV makers.
The tariffs ramped up concerns that the EU and the U.S. could impose more restrictions on Chinese imports, while Beijing could also announce retaliatory measures, denting relations between the world’s largest economies.
Broader Asian stocks drifted lower. Australia’s fell 0.3%, while futures for India’s index pointed to a flat open after the index notched a series of new peaks this week.
South Korea’s was an outlier, rising 0.3% on some sustained strength in technology stocks.
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