China's Stock Market Plunges Amid Weak Data and Political Uncertainty

Chinese stocks and Asian equities declined after worse-than-expected inflation data and disappointment over a Politburo meeting. China's benchmark equity index fell as consumer prices experienced the sharpest decline in three years. The drop in stocks may be attributed to the removal of "forceful" wording in China's monetary policy for 2024. The dollar strengthened against major peers. Traders are anticipating key events this week, including US inflation data, a Federal Reserve policy decision, and retail sales numbers. Citigroup economists warn of a deepening deflation situation in China and rising risk of reserve-requirement ratio and/or rate cuts.