Asian Stock Market: Traces downbeat S&P500 Futures, yields, focus on China, Fed Minutes

• Asia-Pacific equities edge lower amid trade war fears, economic slowdown concerns ahead of FOMC Minutes.
• US-China tussles escalate as Washington, Beijing announces new trade-restrictive measures.
• Yield curve inversion tease recession as FOMC Minutes for June meeting loom.

Market sentiment remains downbeat during Wednesday’s Asian session as China news joins economic slowdown fears to spoil the mood ahead of the Fed Minutes.

That said, headlines surrounding the US-China ties and fresh trade sanctions, as well as the downbeat Chinese PMIs, weigh on the risk appetite the most. On the same line are the looming concerns about Japan’s market intervention and the recession woes flashed by the US Treasury bond yield curve inversion.

While portraying the mood, MSCI’s Index of Asia-Pacific shares ex-Japan retreat from a two-week high, down 0.60% intraday, whereas Japan’s Nikkei 225 drops half a percent at the latest.

It’s worth noting that the S&P00 Futures print mild losses whereas the US 10-year and two-year Treasury bond yields remain mostly unchanged near 3.85% and 4.90% by the press time.

Moving on, downbeat prints of China’s Caixin Services PMI for June, to 53.9 versus 57.1 prior, join the escalating fears of the US-China tension amid fresh warnings of further trade restrictions from Beijing. Recently, China’s Global Times and former Vice Commerce Minister flagged hardships for the US IT companies, as well as metal players. Earlier in the day, China announced abrupt controls on exports of some gallium and germanium products, effective from August 1. The dragon nation’s latest retaliation is in reaction to the US curb on AI chips’ shipments to Beijing.

With this, stocks in China, Australia and New Zealand print minor losses while Hang Seng appears the weakest, down 1.40% intraday as we write, Among the Asian friends. Furthermore, India’s BSE Sensex and GIFT Nifty remain lackluster as broad risk-off mood jostles with the hopes of more economic improvement and record-high foreign investments into India.

Moving forward, Asian traders will keep their eyes on Fed Minutes to confirm Chairman Jerome Powell’s hawkish statements like, “two more rate hikes in 2023”, which in turn can bolster the recession woes, amid higher rates and softer statistics, while also weighing on the riskier assets.

Also read: Forex Today: After a quiet day attention turns to FOMC minutes