Asian Stock Market: Central bankers, China probe bulls as yields swirl higher

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  • Asia-Pacific stocks drift lower as markets reassess inflation, banking concerns.
  • Major central bankers defend rate hikes despite highlighting data dependency.
  • China’s Premier appears hopeful of higher growth but gives air to Sino-American tension.
  • IMF cites need for urgent debt support system; Japan braces for higher wages.

Asian equities remain depressed even as Australia, New Zealand and South Korea print gains during early Thursday. That said, the stock markets in China and Japan print losses and hence highlight overall mildly negative sentiment for the traders.

While portraying the mood, the MSCI’s Index of Asia-Pacific shares outside Japan drops 0.30% whereas Japan’s Nikkei 225 prints 0.80% intraday loss near 27,650 even as Japanese Prime Minister Fumio Kishida braces for higher wages. The reason for pessimism in Tokyo could be linked to the likely negative impact of higher salaries on inflation and the Bank of Japan’s (BoJ) easy money policy.

Elsewhere, stocks in China grind lower as Premier Li Qiang recently said that the economic situation in March is even better than in January and February. The policymaker, however, also raised geopolitical tension by opposing trade protectionism and decoupling, which indirectly targets the US.

It should be noted, however, that dovish concerns about the Reserve Bank of Australia (RBA) and mixed statistics in New Zealand allow equity bulls in Canberra and Auckland to remain hopeful despite seeing losses elsewhere. On the same line is South Korea’s KOSPI as BOK Manufacturing BSI improved in March.

Alternatively, Indian markets are off due to Ram Navmi while Indonesia’s IDX Composite takes clues from Chinese stocks to print mild losses.

On a broader front, Fed Chair Jerome Powell’s teasing of one more rate hike joined Fed Vice Chair for Supervision Michael Barr’s emphasis on data dependency to allow the US Dollar to remain firmer. On the same line could be Fed Chair Powell’s push for alteration in deposit insurance. As a result, the Fed hawks do flex their muscles but wait for more clues and amplify the market’s anxiety ahead of Friday’s key inflation gauge from the US, namely the Core Personal Consumption Expenditure (PCE) Price Index.

Furthermore, International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva said on Thursday, “Urgently need faster, more efficient mechanisms for providing debt support to vulnerable countries.” Her comments renew banking fears which eased previously.

As a result, the S&P 500 Futures struggled around a one-week high marked the previous day, while ignoring Wall Street’s upbeat performance, whereas the US 10-year and two-year Treasury bond yields grind higher after teasing the bond buyers the previous day.

Looking ahead, preliminary readings of the Harmonized Index of Consumer Prices (HICP) gauge for Germany will precede the US fourth quarter (Q4) Core Personal Consumption Expenditure (PCE) and final prints of the US Q4 Gross Domestic Product (GDP) to entertain traders.

Also read: S&P 500 Futures retreat despite Wall Street’s gains, yields seesaw as pre-Inflation anxiety escalates