The risk profile in Asia remains negative as concerns about China and the Federal Reserve continue to impact investor sentiment, leading to sluggish trading hours on Wednesday. The MSCI’s Index of Asia-Pacific shares outside Japan fell by 0.40% intraday, while Japan’s Nikkei 225 followed suit with a 0.35% intraday loss near 28,552.
The Bank of Japan’s exit from its easy-money policy has regained market attention, despite policymakers defending the current policy, possibly due to recent firmer data. Australian Westpac Leading Index for March and upbeat China data, coupled with the International Monetary Fund’s optimism about China, allowed stocks in Canberra and Auckland to buck the trend with mild gains.
However, fears surrounding US-China tensions over Taiwan, the US debt ceiling decision, and Bloomberg’s news on China’s role in the Russia-Ukraine war have added to the risk-off mood, weighing on stocks in Beijing and Hong Kong. Indian equities have seen mild losses, while stocks in South Korea and Indonesia have seen minor gains.
Despite downbeat US housing numbers, the Federal Reserve policymakers still favor the need for higher rates, joining a pause in the US Treasury bond yields to trigger the US Dollar Index’s rebound, causing mild losses in gold and crude oil prices.
While a light calendar may restrict immediate market moves, hawkish concerns about the Fed and geopolitical tensions could push the optimists ahead of Thursday’s New Zealand inflation and key PMIs.
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