Asian Stock Market: Mixed signals from China tests traders ahead of key Fed talks

Equities in the Asia-Pacific region grind higher even as China’s PMIs, pre-Powell anxiety tests buyers.
US Treasury yields remain sluggish despite hawkish hopes from Fed Chair Powell.
Commodities cheer pullback in the US Dollar with mild gains.
Downbeat data from Australia, New Zealand and Japan adds filters to bullish moves.

Anil Panchal FXStreet

Asian markets struggle for clear directions during early Wednesday as traders await crucial catalysts scheduled for publishing. Also likely to have challenged the region’s share traders are mixed signals from China and downbeat data from Australia, New Zealand and Japan.

While portraying the mood, the MSCI’s index of Asia-Pacific shares outside Japan rises 2.6%, but Japan’s Nikkei 225 drops half a per cent to snap the optimism by the press time. The downbeat mood in Tokyo could be linked to Japan’s disappointment with October’s Industrial Production.

On the other hand, stocks in China grind higher as Beijing announced multiple measures to ease the strict lockdown in critical areas after witnessing a retreat in the daily Covid infections from a record high. Even so, the world’s second-largest economy kept its Zero-Covid policy intact. Bloomberg reported the reopening of some city buildings in the greater Zhengzhou region, the home of an essential iPhone plant. Earlier on Tuesday, the news broke that China's Guangdong province will allow the close contacts of Covid cases to quarantine at home.

However, November's downbeat China activity data challenged the dragon nation's positive mood. That said, China’s officials NBS Manufacturing PMI dropped to 48.0 versus 49.2 expected and 49.0 prior. Further details mention that the Non-Manufacturing PMI also slumped to 46.7 from 48.7 prior and 51.7 expected.

Elsewhere, Australia’s ASX 200 rose 0.20% as disappointing inflation numbers raised expectations of easy rate hikes from the Reserve Bank of Australia (RBA). Australia's Monthly Consumer Price Index (CPI) dropped to 6.9% YoY versus 7.4% expected and 7.3% prior.

On the same line, New Zealand’s NZX 50 rallies near 1.0% after downbeat New Zealand Building Permits for October, -10.7% MoM versus 2.4% expected and 3.6% prior.

On a broader front, inactive S&P 500 Futures and sticky US Treasury bond yields challenge the market sentiment. It’s worth noting that Wall Street closed mixed as softer US data jostled with hawkish Fedspeak.

Looking forward, equities are likely to remain sluggish amid a cautious mood ahead of the first speech from Federal Reserve (Fed) Chairman Jerome Powell since the November meeting. Should the policymaker meet hawkish expectations, the market sentiment may sour.

Also read: Forex Today: All eyes on Federal Reserve's Powell, Aussie CPI and China PMIs

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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