Asian Stock Market: Covid, tech updates underpin cautious optimism amid growth fears

• Markets in Asia-Pacific region print mild gains as updates from China, US favor sentiment.
• China’s anticipated covid recovery, rally in tech shares favor Asian market bulls amid anxiety ahead of US Retail Sales, Fed’s Powell.
• RBA Minutes, BOJspeak fail to entertain traders as Treasury yields, stock futures rebound.

Equities in the Asia-Pacific zone grind higher as cautious optimism in China joins softer US data and Fedspeak to underpin the market’s recovery ahead of the key catalysts. That said, MSCI’s index of Asia-Pacific shares outside Japan rises 1.60% while Japan’s Nikkei 225 adds 0.45% heading into Tuesday’s European session.

The NY Empire State Manufacturing Index for May, expected +15.5 versus -11.6 actual, as well as comments from New York Fed President John Williams, underpinned initial risk recovery. Fed’s Williams backed Chairman Jerome Powell’s 50 basis points (bps) rate hike idea by highlighting inflation as the main issue.

On the same line were comments from Bank of Japan (BOJ) policymakers who highlighted the need for easy money despite inflation fears, which in turn adds strength to Japan’s benchmark equity index, namely the Nikkei 225.

Alternatively, the Reserve Bank of Australia’s (RBA) monetary policy meeting minutes signaled a 40 bps rate hike in June but optimism in China helps stocks in Australia and New Zealand.

That said, Shanghai conveyed plans to end the covid-linked lockdown after the third consecutive day of zero coronavirus cases outside the quarantine area. It’s worth noting that the latest comments from China State Planner, stating the increasing downside pressure on the economy, per Reuters, challenge the market’s optimism.

Elsewhere, a record trade surplus allows Indonesia’s IDX Composite to rise 0.75% by the press time whereas South Korea’s KOSPI and India’s BSE Sensex, as well as NIFTY, track China’s tunes to print mild gains.

It’s worth noting that Wall Street benchmarks closed mixed but S&P 500 Futures rise half a percent whereas the US 10-year Treasury yields add 3.6 bps to 2.915% by the press time.

Moving on, the preliminary readings of the Eurozone Q1 GDP, expected to remain unchanged at 0.2% QoQ and 5.0% YoY, will precede the US Retail Sales for April bears an upbeat forecast, expected at 0.7% versus 0.5% prior, to direct short-term market moves. Above all, comments from Fed Chairman Jerome Powell will be crucial as the Fed Boss is up for speaking at an event hosted by the Wall Street Journal.