The Mainland China equity market declined on Tuesday, 16 October 2018, after the government reported inflation rose for the fourth straight month in September 2018. Meanwhile lingering worries over geopolitics, the economic impact from the ongoing Sino-American trade war and rising U.S. borrowing costs also sapped investor sentiments. Around late afternoon, the benchmark Shanghai Composite Index fell 0.9%, or 23.16 points, to 2,544.94, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.9%, or 23.95 points, to 1,257.13. The blue-chip CSI300 index dropped 0.8%, or 24.61 points, to 3,101.84.

China's consumer price index (CPI), a main gauge of inflation, rose 2.5% year-on-year in September, compared with 2.3% for August, , the National Bureau of Statistics data showed on Tuesday. Gains in CPI were contributed by a rise in food prices due to adverse weather and a spike in demand due to the Golden Week festive season. China is aiming to keep annual CPI growth at around 3% this year, the same target as 2017. The producer price index, which measures costs of goods at the factory gate, rose 3.6% year-on-year in September, slowing from the 4.1% increase in August. Rising inflation is a double-edged sword. The central bank has tended to shrug off rising prices, but the trend could limit its room for loosening monetary policy in coming months.

CURRENCY NEWS: China's yuan was up against the U.S. dollar on Tuesday amid firm mid-point fixing by central bank. Prior to market open, the People's Bank of China set the yuan mid-point at 6.9119, strengthened by 35 basis points from previous day fixing.