Asian stocks rise slightly, sentiment fragile amid Chinese growth fears


A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic chart displaying the Shanghai Composite Index, Nikkei Index and Dow Jones Industrial Average in front of a house of brokerage in Tokyo, Japan, March 7, 2022. REUTERS/ Kim Kyung Hoon

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  • Asian stocks, European futures broadly up
  • Hang Seng Tech index rises 5.3%
  • Australian stocks dragged by miners due to China lockdown issues
  • Yuan stabilizes after PBOC cuts foreign reserve ratio

HONG KONG, April 26 (Reuters) – Asian stocks rebounded on Tuesday after a late rally on Wall Street, although fears for global growth fueled by China’s tough COVID-19 restrictions and an expected streak of aggressive tightening by the Federal Reserve undermined risk appetite.

As of 0450 GMT, MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) rose 1.1%, helped by China’s blue chip index (.CSI300) adding 1.4%, after his worst day in two years on Monday. The benchmark Hong Kong Hang Seng Index (.HSI) rebounded 1.9%.

The technology sector (.HSTECH) rebounded 5.3%, boosted by mega-companies such as Tencent Holdings (0700.HK) and Alibaba Group. News that Elon Musk, the world’s richest man, had reached a deal to buy Twitter (TWTR.N) for $44 billion in cash also bolstered the sentiment. Read more

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Nervousness over China’s economic slowdown, however, affected Australian equities, with the local benchmark index falling 2% in the early afternoon, particularly hit by the decline in miners (.AXJO).

Japan’s Nikkei stock index (.N225) pared earlier gains and was down 0.04% by early afternoon. US stock futures were little changed in Asian trading.

The lockdown in Shanghai and the spread of cases in other major cities like Beijing are weighing on growth prospects for the world’s second-largest economy and investment sentiment, said Manishi Raychaudhuri, Asia-Pacific equity strategist at BNP Paribas.

“If the lockdown situation persists any longer,” it will have a significant impact on China’s economy and “will also impact supply chains across the world,” he said.

Markets are also concerned that an aggressive rate of tightening from the US Fed could derail the global economy, which has only just begun to recover from the pandemic.

The Fed is expected to raise rates by half a percentage point at each of its next two meetings. FEDWATCH

The lockdown in China’s financial hub has extended into a fourth week as authorities stick to their “dynamic zero-COVID lockdown” policy to tackle the latest spike in Omicron cases. Read more

In early European trading, pan-regional Euro Stoxx 50 futures added 1.6% to 3,744. German DAX futures rose 1.51% to 14,153, while the FTSE rose 1.07% to 7,445.5.

In the currency markets, the dollar was in great shape on safe-haven demand. China’s offshore yuan was more stable at 6.5558 to the dollar after the People’s Bank of China announced late Monday that it would reduce the amount of foreign currency banks must hold as reserves.

That helped it recover from a yearly low of 6.609 to the dollar on Monday, hurt by fears over China’s economic growth.

The dollar was higher than most of its peers, with its index against a basket of rivals at 101.58, just past its two-year high.

Benchmark US 10-year yields rose to 2.8566% in early afternoon trading. Treasury yields fell from Fed-induced highs on Monday as China’s lockdown and growth fears sent investors back to the safety of U.S. bonds.

The same concerns rocked the oil market on Monday, with prices down 4%. On Tuesday, U.S. crude gained 0.89% to $99.42 a barrel, while Brent rose more than one percent to $103.53 a barrel.

Spot gold added 0.28% to $1,902.96 an ounce.

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Reporting by Xie Yu; Editing by Shri Navaratnam and Himani Sarkar

Our standards: The Thomson Reuters Trust Principles.


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