Asian Stock Market: Bears keep the reins as China property stocks fail to tame growth fears

Asia-Pacific equities grind lower on early Wednesday, despite a corrective bounce in China property stocks, as market players consolidate the previous day’s heavy losses amid a cautious mood ahead of the US ISM Services PMI.

While portraying the mood, the MSCI’s Index of Asia-Pacific shares outside Japan dropped nearly 1.0% whereas Japan’s Nikkei 225 prints 0.75% intraday gains around 33,250 by the press time of early European morning.

It’s worth noting China’s downbeat Caixin Services PMI for August, to 51.8 from 54.1 prior flagged economic fears about the Dragon Nation the previous day. The same were joined were fears of the Sino-American tussles, flagged by comments from US Commerce Secretary Gina Raimondo as she defended the current US tariffs on China until the four-year review is complete.

Also challenging the sentiment were upbeat details of the US Factory Orders and comments from the Federal Reserve (Fed) officials. On Tuesday, the US Factory Orders for July dropped to the lowest since mid-2020 while posting -2.1% MoM figures versus -0.1% expectations and 2.3% previous growth. However, the orders excluding transport rose 0.8% MoM, Shipments of goods stayed firmer and inventories marked the first increase in three months. That said, Federal Reserve (Fed) Governor Christopher Waller’s defense of hawkish monetary policy during a CNBC interview and Cleveland Federal Reserve President Loretta Mester’s rejection of rate cuts favor the US Dollar bulls. It’s worth noting that Fed’s Waller also added, "Data is looking good for soft landing scenario,” which in turn defends the Fed’s preference for “higher for longer” rates.

While the aforementioned catalysts sour the sentiment in the Asia-Pacific region, the recent headlines from Chinese media suggesting more stimulus from the nation’s real estate sector, seem to have fueled the property shares, especially backed by Country Garden’s avoidance of default.

Even so, most Chinese indices remain in the red while tracing the downbeat Wall Street benchmarks and S&P 500 Futures. Apart from that, the US Dollar Index (DXY) seesaws at the highest level since March 15, dicey near 104.80 at the latest, while prices of Gold and WTI Crude Oil tread water around $1,925 and $86.40 as we write. With this, stocks in New Zealand, Hong Kong and India are also downbeat by the press time. It should be noted that Australia’s better-than-forecast figures fail to impress Aussie equity traders as the nation’s key index ASX 200 drops 0.80% on a day as we write.

Looking ahead, the concerns about China’s economic recovery and the US soft landing will dominate the market moves and hence clues for the same should be observed closely for clear directions.

Also read: S&P 500 Futures portray risk-off mood even as yields seesaw at weekly top after a jump