Asian Stock Market: China leads the bears amid recession fears

  • Asian equities remain on the back foot as their Western counterparts.
  • China’s heatwave, covid conditions renew recession fears, Fed Minutes also weighed on sentiment.
  • Downbeat Australia data, RBNZ’s Orr offered extra catalysts to please bears in Asia-Pacific.

Shares in the Asia-Pacific region track their global counterpart, pushed more by the China-linked headlines, as recession woes dilute sentiment during early Thursday in Europe.

Also keeping the equity traders worried were downbeat figures of Aussie employment data and downbeat comments from the Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr. Above all, the Federal Open Market Committee (FOMC) meeting minutes amplified the economic slowdown concerns and weighed on the risk appetite.

That said, the MSCI’s index of Asia-Pacific shares ex-Japan drops 0.60% intraday while Japan’s Nikkei 225 prints 0.85% intraday losses by the press time.

It’s worth noting that the US 10-year Treasury yields retreat from the weekly top surrounding 2.90% to 2.88% down two basis points (bp) by the press time. That said, the yields jumped the previous day heavily before retreating after the Fed Minutes. Further, the S&P 500 Futures print mild losses after reversing from a four-month high the previous day.

Talking about China, Goldman Sachs and Nomura cut the dragon nation’s growth forecasts after witnessing the latest rise in the covid numbers. Also negatively impacting the Chinese economy are the doubts over the People’s Bank of China’s (PBOC) capacity to tame recession woes. Additionally, comments from the US Trade Representative’s office stating, “Early this autumn, the US and Taiwan will begin formal negotiations on a trade initiative,” seem to renew the fears of the US-China tussle and also roil the mood.

Amid these plays, stocks in China and New Zealand lead the bears whereas India and Indonesia appear to lack momentum as policymakers try to spread optimism, despite the macro woes.

Elsewhere, the US Dollar Index (DXY) stays firmer and the prices of gold print mild gains. However, oil remains the biggest gainer, amid fears of a supply crunch, with a nearly 1.0% upside.

A light calendar requires the risk catalysts to keep the driver’s seat.

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