Asian Stocks Are Down, China Auto Sales Slump

Asian Stocks Are Down, China Auto Sales Slump

On Monday morning, Asia Pacific stocks were generally lower, with bonds continuing their selloff as investor concerns about inflation and monetary tightening remained. However, after the first round of the French presidential election, incumbent Emmanuel Macron is in the lead.

China’s Shanghai Composite had down 1.93 percent, while the Shenzhen Component had fallen 2.53 percent.

The Hang Seng Index in Hong Kong fell 2.68 percent. The Nikkei 225 in Japan fell 0.66 percent, while the KOSPI in South Korea fell 0.53 percent.

In Australia, the ASX 200 increased 0.12%.

Investors took a sigh of relief after the French election results. Still, worries linger about whether Macron can hold his lead over competitor Marine Le Pen in the April 24 runoff.

Cleveland Fed President Loretta Mester expressed confidence that the United States will escape a recession despite the tighter policy; however, inflation will likely continue above 2% until 2023. Later in the day, Chicago Fed President Charles Evans will talk, followed by Richmond Fed President Thomas Barkin the next day. On Thursday, Mester and Philadelphia Fed President Patrick Harker will talk.

The 10-year Treasury yield in the United States rose to 2.72 percent, the highest since early 2019; meanwhile, Australia’s 10-year bond rate surpassed 3 percent for the first time since 2015.

China auto sales slump

China’s auto sales fell in March as its COVID-19 outbreak-control measures took their toll, while Tesla (NASDAQ: TSLA) Inc was among automakers feeling the pinch of output constraints.

According to the China Association of Automobile Manufacturers, sales in the world’s largest car market fell 11.7 percent year on year in March to 2.23 million vehicles; the first drop in three months and dramatic contrast to an 18.7 percent increase in February.

Because of the recent pandemic scenario, the results in March were not very good; we currently do not see much improvement in April, said the association’s deputy secretary-general.

Tesla has been shutting down its Shanghai manufacturing since March 28; Volkswagen’s (DE: VOWG p) Shanghai joint venture has also shut down this month. Volkswagen and Toyota Motor (NYSE: TM) Corp joint operations in Changchun, Jilin’s capital, have been suspended since mid-March.

Tesla only completed 55,462 units in March; moreover, it also suspended production for two days in the middle of the month.

That was just 154 more than in February when workers had a significantly shorter month owing to the Lunar New Year break. In January, the plant produced 68,117 automobiles.

According to the data, Tesla’s exports of Chinese-made vehicles fell to just 60 in March; meanwhile, domestic deliveries more than doubled from February.

CATL, the world’s largest battery manufacturer, also said on Monday that it had built a “closed-loop management” system at its main factory to maintain production to avoid viral transmission; a “closed-loop management” system is similar to a bubble-like structure in which workers sleep, live, and work in seclusion from the rest of society.

Overall March sales in China fell; however, sales of new energy cars, including battery-powered electric vehicles, plug-in petrol-electric hybrids, and hydrogen fuel-cell vehicles, more than doubled to 484,000 units.