Asian Stock Market: Sentiment dwindles amid Fed’s hawkish halt, downbeat China data

• Asia-Pacific markets edge higher as Fed pauses multi-month-old rate hike cycle.
• Softer China data underpins hopes of more stimulus from Beijing and favor risk profile.
• Upbeat Aussie jobs, employment report joins market’s bets of July Fed rate hike to prod optimists.

Asian equities grind higher, making rounds to a two-month high early Thursday, as traders struggle to cheer the Federal Reserve (Fed) rate hike pause amid “higher for longer” fears. Also challenging the bulls could be hawkish concerns about the Reserve Bank of Australia (RBA) and downbeat China data.

While portraying the mood, the MSCI’s Index of Asia-Pacific shares outside Japan seesaw at the highest levels since April amid a five-day uptrend, up 0.30% intraday by the press time. That said, Japan’s Nikkei 225 adds 140 points to 33,655, rising 0.40% on a day at the latest.

It should be noted that Australia’s ASX 200 rises 0.20% whereas New Zealand’s NZX50 adds 0.35%. Further, Chinese shares also edge higher despite downbeat data.

That said, China’s Retail Sales for May rises 12.7% YoY versus 13.6% expected and 18.4% prior while the Industrial Production growth also eased to 3.5% in the stated month from 5.6% previous readings and 3.6% market forecasts. It should be noted that China cut its medium-term loan rates, by 10 bps, and drowned the Chinese Yuan (CNH) to a fresh six-month low.

On the other hand, Australia’s Consumer Inflation Expectations for June rose to 5.2% versus 4.8% expected and 5.0% prior. Further, the Employment Change rallied by 75.9K in May compared to 15K market forecasts and -4.3K previous readings. Additionally, Australia's Unemployment Rate drops to 3.6% against expectations of witnessing a no-change figure of 3.7%.

Earlier in the day, New Zealand’s first quarter (Q1) 2023 Gross Domestic Product (GDP) matches the -0.1% QoQ forecast, versus -0.7% (revised) prior. Further details reveal that the yearly figures ease to 2.2% YoY for the said period versus 2.6% market expectations and 2.3% previous readings. Given the second consecutive negative quarterly growth figure, the Pacific nation flags a ‘technical’ recession.

It should be noted that the US Federal Open Market Committee (FOMC) kept the benchmark interest rate unchanged at 5.0-5.25%, matching market expectations of pausing the multi-month-old hawkish cycle after 10 consecutive rate lifts. However, the upbeat FOMC Economic Projections and Federal Reserve (Fed) Chairman Jerome Powell’s speech renewed the hawkish Fed bias and might have prodded the sentiment.

Amid these plays, S&P500 Futures struggle at the yearly top whereas the US Treasury bond yields rebound after witnessing a pullback during the post-Fed move.

Also read: Forex Today: A hawkish hold from the Fed helps the Dollar