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Most Asian shares fell on Thursday as concerns persisted about rising interest rates and slowing global economic growth, although optimism over further stimulus measures from China helped limit some losses.
China's losses limited as state banks cut deposit rates
China’s Shanghai Composite and CSI 300 indexes were flat to lower, while Hong Kong’s Hang Seng fell 0.3% after Hong Kong’s largest state-owned banks were seen cutting interest rates on yuan deposits. The moves suggest further improvement in local liquidity, and could also signal a broader interest rate cut by the People’s Bank of China this month, as Beijing seeks to support a slowing economic recovery. Trade data showed an unexpected drop in exports in May, adding to the country’s growing economic weakness. Imports also fell, though at a slower pace. Attention now turns to inflation data from Asia’s largest economy due on Friday, for further clues on the country’s ongoing disinflationary trend. Chinese stocks have largely erased all of their gains made so far this year, as optimism over the country’s economic recovery fades.
Asian stocks were broadly lower as traders shied away from riskier assets ahead of next week’s Federal Reserve meeting. Markets are divided over whether the central bank will raise or hold interest rates, with mixed signals about the U.S. economy. South Korea’s KOSPI index fell 0.4% as the government projected weak annual economic growth of 1.6%, nearly half the 3.1% expected in 2022. Australia’s ASX 200 index was flat, as data showed the country’s exports and trade surplus fell in April. The data points to further pressure on the Australian economy, which is facing rising interest rates and high inflation.
The Reserve Bank of Australia also raised interest rates this week and warned of further economic weakness in Australia this year. Indian stock futures are pointing to a flat open ahead of the Reserve Bank of India (RBI) meeting later in the day. The RBI is widely expected to keep interest rates unchanged.
Japan losses capped by strong Q1 GDP revision
Japan’s Nikkei 225 and TOPIX indexes fell 0.2% and 0.1% respectively on profit-taking. However, the losses were largely erased by the country’s upward revision of first-quarter gross domestic product (GDP), which showed the resilience of the Japanese economy. Economic optimism, supported by hopes for continued dovish policy from the Bank of Japan, has pushed Japanese stocks to 33-year highs in recent weeks. Despite the profit-taking on local indexes this week, stocks remain at lofty valuations.
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