Asian Stock Market: Grinds lower as G20, China joins recession woes amid sluggish session


  • Asia-Pacific equities remain pressured amid economic slowdown fears.
  • China prints downbeat GDP growth, G20 meeting highlights risks for poor economies.
  • Easing yields, mixed Fedspeak couldn’t impress equity bulls.
  • US consumer-central data, last round of Fedspeak before FOMC awaited for clear directions.

Markets in the Asia-Pacific region remain depressed on Friday, despite mildly bid US stock futures and sluggish Treasury yields. The reason could be linked to the downbeat economic signals from China and the Group of 20 key nations’ (G20) meeting in Indonesia.

China’s Q2 Gross Domestic Product (GDP) shrank more than -1.5% expected to -2.6% QoQ, versus 1.4% prior. Further, the Industrial Production also eased but Retail Sales improved in June.

On the other hand, “Indonesian Finance Minister Sri Mulyani Indrawati said on Friday failure by G20 finance chiefs meeting in Bali to reach consensus could be catastrophic for low-income countries amid soaring food and energy prices exacerbated by the war in Ukraine,” reported Reuters.

Against this backdrop, MSCI’s index of Asia-Pacific shares ex-Japan drops 0.30% intraday while poking a two-month low. On the other hand, Japan’s Nikkei 225 rises 0.55% on a day heading into the European session.

Reuters mentioned the Bank of Japan’s (BOJ) dovish bias to back the Nikkei 225’s mildly positive performance. “The Bank of Japan (BOJ) is expected to reiterate its resolve next week to keep monetary policy ultra-loose and remain a dovish outlier as many other central banks raise interest rates, a commitment that could lead to further falls in the yen,” said the news.

It should be noted that Australia’s ASX 200 fails to cheer likely improving relations between Canberra and Beijing, by posting nearly 1.0% daily loss, whereas New Zealand’s NZX 50 also declines 0.95% at the latest amid economic fears.

Elsewhere, Indonesia’s IDX Composite appears to cheer upbeat trade numbers while posting 0.30% intraday gains. However, India’s BSE Sensex struggles to overcome weekly losses, up 0.15% intraday around 53,500 by the press time.

On a broader front, the reduction in the hawkish Fed bets and easing of the inversion gap of the key US Treasury yield curves, namely between 2-year and 10-year bonds, appears to have previously favored the market sentiment amid Fed policymakers’ attempt to talk down a 100 bps rate hike. The same could be witnessed in mild gains of the S&P 500 Futures.

Moving on, the US Retail Sales, expected 0.8% MoM in June from -0.3% marked in May, will precede preliminary readings of the Michigan Consumer Sentiment Index (CSI) for July, expected 49.9 versus 50.0 prior, could direct intraday traders. Also important will be the Fedspeak and updates from the meeting of the Group of 20 key nations (G20) in Indonesia.

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