HONG KONG, RAW – Asian shares fell on Wednesday as weak Chinese economic data reinforced worries about slowing growth globally as well as in the world’s second-biggest economy amid fraught nerves over a still-dominant pandemic and tapering of central banks’ stimulus.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.82 per cent, extending earlier losses after the release of the Chinese data, while Tokyo’s Nikkei shed 0.89 per cent, moving off a more than 31-year closing-high the day before.

A burst of data out of China showed businesses were grappling with the impact of localised lockdowns following sporadic COVID-19 outbreaks, supply bottlenecks and high raw materials costs.

Retail sales grew at the slowest pace since August 2020 and missed analysts expectations, while industrial output also rose at a weaker pace from July, underscoring recent signs of slackening economic momentum in China and adding to expectations Beijing will offer more stimulus over coming months.

After the data, Chinese blue chips were down 0.73 per cent.

The Hong Kong benchmark shed 0.87 per cent dragged down by casino stocks as the gaming hub of Macau begins a consultation ahead of a closely watched rebidding of its multi-billion dollar casinos next year.

Shares of Wynn Macau at one point were down more than 30 per cent.

Markets also remained focused on the timeline for tapering the Federal Reserve’s massive pandemic-led stimulus.

“There is uncertainty in markets at the moment as investors wait to see what the Federal Reserve will do about tapering their asset purchases, which depends on the state of the labour market and the inflation situation,” said Sean Debow Asia CEO of Eurizon Asset Management.

Debow said greater clarity would emerge on both in the coming weeks though for now markets were quick to react to any data points on employment and inflation.

Overnight the US Labor Department reported the Consumer Price Index in August posted its smallest gain in six months, suggesting inflation has probably peaked, aligning with Fed Chair Jerome Powell’s long-held belief that high inflation is transitory.

Lower inflation suggests that the Fed will be under less pressure to begin trimming its vast asset purchases, and, as a result, the yield on the benchmark 10-year note US10YT=RR fell as low as 1.263 per cent, its lowest since Aug. 24.

Yields recovered slightly and were little changed in Asia on Wednesday at 1.285 per cent, while the dollar was steady also having slipped against a basket of its peers on the inflation figures.

Overnight on Wall Street, worries about slowing growth saw the Dow Jones Industrial Average lose <0.84 per cent, while the S&P 500 fell 0.57 per cent and the Nasdaq Composite was down 0.45 per cent.

Barely a tenth of respondents to Bank of America’s monthly fund manager survey expect a stronger global economy in the coming months, marking the lowest proportion since last April’s initial COVID-19 panic, the September edition of the survey showed.

The spread of the Delta variant was cited as the reason for the pessimism.

Oil prices gained on a larger than expected drawdown in crude oil stocks in the United States, with US crude gaining 0.51 per cent to $US70.82 ($A96.93) a barrel and Brent crude rising 0.46 per cent to $US73.94 ($A101.20) per barrel.

Spot gold was traded at $US1802.0374 ($A2,466.4928) per ounce off 0.12 per cent, having reached a one week peak of $US1,808.50 ($A2,475.34) on the prospects for lower interest rates.