Asian Stock Market: Mostly downbeat on central bank moves, softer China data

• Asia-Pacific shares remain mildly offered, mostly trading down, amid fears of higher rates.
• Fed/HKMA announced 50 bps rate increases, PBOC keeps one-year MLF unchanged.
• Downbeat China data, rebound in Treasury yields also challenge Asian equities.
• Key central bank moves, US Retail Sales eyed for fresh impulse.

Markets in the Asia-Pacific region remain depressed while taking the leads from the key central banks, as well as data from the regional leader China, during early Thursday. That said, the cautious mood ahead of important central bank announcements also weigh on the sentiment and the equities.

While portraying the mood, the MSCI’s index of the Asia-Pacific shares ex-Japan prints mild gains but Japan’s Nikkei 225 drops half a percent to 28,050 by the press time.

It should be noted that Japan’s trade deficit eased in November but fears of monetary policy tightening by the Bank of Japan (BOJ) seemed to have weighed on the markets in Tokyo.

Elsewhere, China reported disappointing statistics as the dragon nation’s Retail Sales slumped to -5.9% in November versus -3.6% expected and -0.5% prior while the Industrial Production came in at 2.2% compared to 3.3% market forecasts and 5.0% previous readings. Also, the People’s Bank of China (PBOC) held a one-year medium-term lending facility (MLF) rate unchanged for the fourth straight month at 2.75% and highlighted the pessimism in the market.  Furthermore, Hong Kong Monetary Authority announced 50 basis points (bps) rate hike and weighed on the market’s risk profile.

With this, stocks in China and Hong Kong drop, which in turn exert downside pressure on Australian and New Zealand equities, even as Aussie job numbers and New Zealand Gross Domestic Product (GDP) for the third quarter (Q3) came in firmer.

On a broader front, S&P 500 Futures remain directionless but the US 10-year Treasury bond yields probe a two-day downtrend near 3.50%. Further, the US two-year US bond yields also extend recovery from the monthly low while printing the first daily positive in three near 4.25%.

That said, the US Dollar Index (DXY) consolidates recent losses around 103.90, up 0.30% intraday while bouncing off the six-month low amid a cautious mood. The US Dollar’s rebound could also be linked to the reassessment of the Fed verdict, suggesting a 50 bps rate hike and readiness to hold the rate higher for a longer period.

Moving on, announcements from the Swiss National Bank (SNB), European Central Bank (ECB) and the Bank of England (BOE) same could trigger market volatility and are worth observing. Additionally important to watch will be the US Retail Sales for November, expected -0.1% MoM versus 1.3% prior.