Asia stocks fall ahead of US Fed rate decision, China shares drop on weak data

AI Sentiment: Bearish
Reason: The article presents a negative outlook for global markets, with Asian shares falling due to apprehension over the U.S. Federal Reserve's decision on interest rates and weak economic data from China.

Asian shares experienced a decline as investors eagerly await the U.S. Federal Reserve's decision on interest rates, which will have significant implications for global markets. This comes amid concerns about inflation and the economic recovery from the COVID-19 pandemic. Furthermore, Chinese shares also suffered a drop due to weak economic data.

MSCI's broadest index of Asia-Pacific shares outside Japan dropped 0.6%, with Chinese blue chips falling 1%. In Japan, the Nikkei fell 0.5%, while Australian shares eased 0.6%. South Korean shares also declined, with the KOSPI falling 0.3%.

Investors are keeping a close eye on the Fed's two-day policy meeting, which will conclude on Wednesday. While the Fed is expected to maintain its accommodative stance, market participants are looking for clues about when the U.S. central bank might start tapering its asset purchases. Any indication of a timeline could affect the market's trajectory, potentially adding to the sell-off in Asian shares.

Weak economic data from China also weighed on the markets. Industrial output in the country grew at a slower pace than expected in August, while retail sales significantly missed forecasts. This suggests that the world's second-largest economy is facing significant pressure from tight COVID-19 containment measures and supply disruptions.

On Wall Street, U.S. stocks ended lower on Monday, with the S&P 500 falling 0.57% and the Nasdaq Composite dropping 0.45%. The Dow Jones Industrial Average also fell 0.84%, reflecting heightened investor caution ahead of the Fed's policy decision.

The dollar index, which measures the greenback against a basket of six major currencies, rose slightly to 92.75, while the yield on benchmark 10-year Treasury notes was at 1.324%. Oil prices also fell, with Brent crude futures down 0.8% at $73.56 a barrel, and U.S. West Texas Intermediate (WTI) crude futures down 1% at $70.29 a barrel.

Overall, investors are navigating uncertain waters amid the ongoing economic recovery from the pandemic, the Fed's upcoming decision on interest rates, and the weak economic data from China. The coming days will be crucial in determining the direction of global markets.