Asian Stock Market: Differs from Wall Street’s gains on China growth fears

• Asian-Pacific equities remain pressured despite Wall Street’s upbeat start of the week performance.
• Covid woes, Sino-American headlines push major banks to downgrade China’s growth forecasts.
• Quad Summit, PMIs and Fed’s Powell are crucial for the day.

Markets in the Asia-Pacific region remain depressed, despite Wall Street’s notable run-up, as mounting fears of growth in China join hawkish Fedspeak and anxiety ahead of the key data/events. Also keeping the markets pressured is the ongoing Quad Summit in Tokyo that recently offered more uncertainty by renewing the US-China trade concerns.

While portraying the mood, MSCI’s Index of the Asia-Pacific shares outside Japan drops 0.80% intraday whereas Japan’s Nikkei 225 drops 0.55% intraday by the press time of early Tuesday.

US Trade Representative (USTR) Katherine Tai poured cold water on the face of expectations that the Sino-American jitters will be eased soon, at least for the trade concerns. The US diplomat said, “We're still working on next actions with China,” while turning down the optimism triggered by US President Joe Biden’s comments suggesting a reversal of the Trump-era tariffs on China.

It should be noted that JP Morgan joined Goldman Sachs in cutting China’s economic growth forecasts for 2022 and exerts additional downside pressure on the APAC (Asia-Pacific) shares.

Not only the covid and the Russia-Ukraine woes but fears of rising power prices also weigh on the Chinese economic transition and challenge the mood of late.

As a result, most shares in China, Hong Kong, Australia and New Zealand remain on the back foot, with Hang Seng losing the most. However, Indian equities lick their wounds as traders cheer on recent government actions, like tax cuts on oil, etc.

In addition to China-linked fears, hawkish comments from San Francisco Federal Reserve Bank President Mary Daly and Kansas City Fed President Esther George also weigh on the market’s mood. On the same line is the cautious mood ahead of the preliminary readings of the US S&P Global Manufacturing and Services PMIs for May and the scheduled speech from Fed Chairman Jerome Powell.

Looking forward, updates from Quad Summit in Tokyo and the US PMIs may entertain traders ahead of Fed Chairman Jerome Powell’s comments. Should Fed’s Powell repeat the latest 50 bps rate hike support, the market’s risk-on mood might return to the table.

Read: S&P 500 Futures, US Treasury yields portray cautious mood ahead of Fed’s Powell, PMIs