Asia’s major stock indexes returned a patchy set of numbers on Wednesday with investors distracted by a downgrade in China’s outlook, a tech rally, bargain-buying and bets on big US data due later in the day.
Shares across the region went in different directions with some unfazed by rating agency Fitch revising its outlook on China to negative, though it did trigger a mild domestic sell-off as the world’s second-biggest economy struggles to mount a solid post-Covid recovery.
China stocks fell, dragged by real estate shares and Fitch’s rating move, citing increasing risks to the country’s public finance outlook, though Hong Kong shares were up, led by tech stocks.
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Fitch affirmed China’s sovereign rating at ‘A+’ even though the outlook was downgraded to negative and it forecast economic growth this year would slow.
Several property developers reported weakening sales in March, suggesting continued pressure for the sector and pulling property stocks down. Investors are also awaiting for a string of key economic data due this week and the next week to gauge policy paths.
The blue-chip CSI 300 index was down 0.81% while the Shanghai Composite Index lost 0.70%, or 21.20 points, to end at 3,027.34. The Shenzhen Composite Index on China’s second exchange dropped 1.74%, or 30.52 points, to 1,720.28.
Chinese H-shares listed in Hong Kong rose 2.15% to 6,021.79, while the benchmark Hang Seng Index gained 1.85%, or 311.10 points, to close at 17,139.17.
Japan’s Nikkei share average closed lower, as investors booked profits after two straight sessions of gains, while caution prevailed ahead of a key US inflation reading.
The Nikkei share average was down 0.48%, or 191.32 points, to close at 39,581.81, while the broader Topix fell 0.43%, or 11.90 points, to 2,742.79. Shares of Uniqlo brand owner Fast Retailing fell 1.11% to become the biggest drag in the Nikkei.
Elsewhere across the region, in earlier trade, Sydney, Mumbai, Bangkok and Wellington were in the green, though Taipei edged lower. Seoul was closed for a holiday.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.48%, after US stocks ended the previous session with mild gains. The index is up 0.2% so far this month.
Dollar Gains On Yen
In early European trades, the pan-region Euro Stoxx 50 futures were up 0.55% at 4,970, German DAX futures were up 0.39% at 18,391, FTSE futures were up 0.64% at 7,996. US stock futures, the S&P 500 e-minis, were up 0.1% at 5,265.3.
The yield on benchmark 10-year Treasury notes was at 4.3556% compared with its US close of 4.366% on Tuesday. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.7384% compared with a US close of 4.747%.
In Asian trade, the dollar rose 0.01% against the yen to 151.78. The currency is getting closer to its high this year of 151.97 on March 27.
The European single currency was flat at $1.0856, having gained 0.64% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up at 104.14.
US consumer price data due on Wednesday will be closely watched by investors as they seek direction on the next move in interest rates. The data is expected to show a rise in headline inflation to 3.4% year-on-year, from 3.2% in February.
The prospect of a US interest rate cut as early as June is now being considered by financial markets, with the inflation reading seen as key to the central bank’s next move.
US crude ticked up slightly to $85.34 a barrel. Brent crude rose to $89.52 per barrel.
Gold was slightly higher. Spot gold traded at $2,352.93 per ounce.
Key figures
Tokyo – Nikkei 225 < DOWN 0.48% at 39,581.81 (close)
Hong Kong – Hang Seng Index > UP 1.85% at 17,139.17 (close)
Shanghai – Composite < DOWN 0.70% at 3,027.34 (close)
London – FTSE 100 > UP 0.50% at 7,974.19 (0934 BST)
New York – Dow < DOWN 0.02% at 38,883.67 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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