Asian stocks in defensive mood on China and rate worries

div classBodysc17zpet90 cdBBJodivpBy Julie Zhup

pHONG KONG Reuters – Asian shares traded cautiously on Tuesday, with investors weighing Chinas measures to cushion an economic slowdown and the prospect of aggressive Federal Reserve monetary policy tightening. pdivdivdiv classBodysc17zpet90 cdBBJodiv

pInvestors are also bracing for a barrage of earnings that will help them assess the impact of the Ukraine war and a spike in inflation on company financials. Netflix, Tesla and Johnson & Johnson are all to report this week.p

pMoscow has refocused its ground offensive in Ukraines two eastern provinces but Ukrainian President Volodymyr Zelenskiy has vowed to fight on. p

pEarly in the Asian trading day, MSCIs broadest index of AsiaPacific shares outside Japan was down 0.5 while U.S. stock futures, the S&P 500 eminis, were up 0.2.p

pAustralia‘s S&PASX 200 edged up 0.66, as strong commodity prices lifted mining and energy stocks, while Japan’s Nikkei rose 0.18.p

pChina‘s bluechip CSI300 index was 0.06 higher in early trade while the Shanghai Composite Index rose 0.24. Hong Kong’s Hang Seng index opened down 2.4, pressured by a slump in tech giants listed in the city amid Chinas latest regulatory crackdown on the sector. p

pThe Peoples Bank of China PBOC said on Friday it would cut the reserve requirement for all banks by 25 basis points bps, releasing about 530 billion yuan 83.25 billion in longterm liquidity to cushion a slowdown. p

pInvestors, however, felt the smallerthanexpected cut might not be enough to reverse a sharp slowdown in the worlds No. 2 economy that could significantly affect global growth.p

pChina‘s gross domestic product GDP on Monday beat analysts’ expectations with a 4.8 increase in the first quarter from a year earlier, while data on March activity showed weakness in consumption, property and exports affected by COVID19 curbs.p

pAnalysts said the key question was whether authorities would make adjustments to the tough antiCOVID19 measures.p

p“We expect more policy support, mainly in the form of more infrastructure investment, stronger credit growth, and easier property policy. But we do not see the government undertake ‘whatever it takes’ to achieve the 5.5 growth target, nor shift the Covid policy soon,” said Wang Tao, Head of Asia Economics and Chief China Economist of UBS Investment Bank Research.p

pWall Street ended the day lower in a choppy trading day on Monday, as investors contrasted Bank of Americas positive quarterly earnings with surging bond yields ahead of further earnings cues this week.p

pA significant cut to global growth expectations from the World Bank, paired with March weakness in Chinas latest economic numbers injected some pessimism into U.S. markets, which opened Monday following a holidayshortened previous week.p

pThe Dow Jones Industrial Average ended down 0.11, while the S&P 500 dipped 0.02 and the Nasdaq Composite slid 0.14.p

pMarkets were closed on Monday in Australia, Hong Kong and many parts of Europe for the Easter holiday.p

pThe benchmark 10year Treasury yield was last at 2.845, after previously hitting 2.884 earlier on Monday, the highest since December 2018, as investors adjusted for the Federal Reserve to raise rates by 50 basis points at its May and June meetings to contain rapid inflation. p

pThe twoyear yield, which rises with traders expectations of higher Fed fund rates, touched 2.4459 compared with a U.S. close of 2.46. p

pThe dollar index, a gauge of the greenbacks value against six major currencies, was up at 100.88 after surging to 100.86 on Monday, the highest since April 2020. p

pOil prices were slightly lower on Tuesday, after having been boosted by concerns over tight global supply amid the Ukraine crisis in the previous sessions.p

pU.S. crude dipped 0.57 to 107.59 a barrel. Brent crude fell to 112.7 per barrel. p

pGold prices steadied on Tuesday, after getting within a stones throw of the key 2,000 per ounce level in the previous session.p

pSpot gold traded at 1,977.18 per ounce. [GOL]p

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pp Editing by Jacqueline Wongp

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