Asian Stock Market: Bulls struggle to keep reins as ADB renews recession fears

• Asia-Pacific shares fade the previous optimism ahead of the key ECB.
• ADB cuts developing Asia forecasts amid fears from Ukraine, central bank aggression.
• China’s covid woes, fears from real-estate markets also exert downside pressure.
• ECB could renew investor sentiment if defending its dovish bias.

Market sentiment remains mixed during early Thursday morning in Europe as traders remain anxious ahead of the key European Central Bank (ECB) monetary policy meeting. Also keeping the Asia-Pacific equity traders on their toes is the return of recession fears and escalating covid woes in the region.

It should be noted that the Asian Development Bank (ADB) downgraded its growth forecasts for developing Asia for this year and next, reflecting the economic fallout from Russia's war in Ukraine and aggressive tightening by global central banks to tame inflation, per Reuters. As per the latest forecasts, the ADB said it now expects the bloc's combined economy, which includes China and India, to expand 4.6%, slower than its 5.2% projection in April.

Elsewhere, the South China Morning Post (SCMP) amplified covid woes as it said, “China’s top Covid official denies authorities are easing controls and calls for a swift response to new outbreaks.”

While portraying the mood, the MSCI’s index of Asia-Pacific shares ex-Japan drops 0.15% intraday whereas Japan’s Nikkei 225 printed mild gains around 27,740 as the Bank of Japan (BOJ) defends its easy money policies despite citing inflation fears.

Elsewhere, Australia’s ASX 200 gains 0.10% near 6,765 while Chinese stocks are mostly down amid looming fears of real-estate bankruptcy and coronavirus crisis. Even so, New Zealand’s NZX 50 gains 1.0% as Kiwi traders remain hopeful of firmer growth ahead.

Hong Kong’s Hang Seng drops 1.0% and weighs on Indonesia’s IDX Composite, down 0.80% intraday at the latest, but India’s BSE Sensex prints mild gains even if the nation is expected to witness economic pessimism.

On a broader front, the S&P 500 Futures pare early day losses but the US 10-year Treasury yields fail to improve, down 1.5 basis points near 3.02%.

The global markets recently turned positive on the restoration of the gas flows from Russia’s Nord Stream 1 pipeline, even if gradual, appeared to have improved the market’s mood although Germany considers it as 30% of capacity.

Looking forward, Asia-Pacific traders should observe the ECB outcome for clear directions. Also important will be the updates on Nord Stream gas output for Europe and recession fears.

Also read: S&P 500 Futures, yields remain pressured as recession fears accelerate ahead of ECB