Asian Stock Market: Grinds lower amid fresh fears from China, Fed, Oil eases on DXY rebound

• Asian equities remain downbeat while tracking global counterpart, lacks follow-through amid light calendar.
• Geopolitical concerns surrounding China, hawkish Fedspeak prod optimists.
• Yields pause previous fall and allow US Dollar Index (DXY) to recover.
• Risk catalysts will be in focus ahead of Fed’s Beige Book.

Risk profile remains downbeat in Asia as headlines surrounding China and the Federal Reserve (Fed) weigh on sentiment amid sluggish trading hours on Wednesday. While portraying the mood, the MSCI’s Index of Asia-Pacific shares outside Japan drop 0.40% intraday whereas Japan’s Nikkei 225 copies the moves with 0.35% intraday loss near 28,552 by the press time.

It’s worth noting that concerns about the Bank of Japan’s (BoJ) exit from the easy-money policy regain market attention even as policymakers try to defend the current policy. The reason could be linked to the recently firmer Japan data.

That said, upbeat prints of Australia Westpac Leading Index for March and upbeat China data, coupled with the International Monetary Fund’s (IMF) optimism about the dragon nation allow stocks in Canberra and Auckland to buck the trend with mild gains at the latest.

Elsewhere, fears surrounding the US-China tension about Taiwan, due to the US House China Committee’s discussion about the Taiwan invasion scenario, weigh on the risk profile and stocks in Beijing and Hong Kong. On the same line could be the likely drag on the US debt ceiling decision due to US President Joe Biden’s hesitance in lifting limits. Additionally, Bloomberg released news suggesting China’s role in the Russia-Ukraine war, which in turn adds strength to the risk-off mood.

Furthermore, the Indian equities print mild losses whereas stocks in South Korea and Indonesia print minor gains by the press time.

On a broader front, downbeat US housing numbers failed to stop the Federal Reserve (Fed) policymakers from favoring the need for higher rates, which in turn joins a pause in the US Treasury bond yields to trigger the US Dollar Index (DXY) rebound. With this, the prices of Gold and Crude Oil print mild losses as we write.

Moving on, a light calendar may restrict immediate moves of the market but hawkish concerns about the Fed and geopolitical fears may prod the optimists ahead of Thursday’s New Zealand inflation and key PMIs.

Also read: S&P 500 Futures retreat amid geopolitical fears, sluggish yields, Fedspeak, China eyed