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Asian Stock Market: Bears keep reins amid downbeat Aussie/China data, hawkish Fed bets

  • Asia-Pacific shares remain bearish as softer statistics joins broad economic woes.
  • Australia’s Q2 GDP, China trade numbers fail to impress bulls, neither did the stimulus efforts.
  • Markets pricing of 0.75% Fed rate hike in September increased after firmer US data.
  • Fedspeak, stimulus updates could entertain traders.

Shares in the Asia-Pacific region traced Wall Street’s losses on Wednesday as economic pessimism grows after firmer US data underpins Fed’s aggression while downbeat figures at home amplify recession concerns.

While portraying the mood, the MSCI’s Index of Asia-Pacific shares outside Japan drops to the fresh low in two years, down 1.11% by the press time. That said, Japan’s Nikkei 225 lost nearly 1.0% to 6,725 by the press time of early European morning.

It’s worth noting that Hong Kong’s Hang Seng leads the Asia-Pacific bears with a 1.75% daily fall while Australia’s ASX 200 appears the second one on the bearish line. Aussie markets fell after Australia’s second quarter (Q2) Gross Domestic Product eased to 0.9% QoQ versus 1.0% expected and 0.8% prior. The YoY details suggest 3.6% growth compared to 3.5% market consensus and 3.3% in previous readings. Earlier in the day, Australia’s AiG Performance of Services Index rose past 51.7 prior to 53.3 in August.

Elsewhere, “China’s exports growth weakened in August, as surging inflation crippled overseas demand and fresh COVID curbs and heatwaves disrupted production, reviving downside risks for the economy,” per Reuters. The news also mentioned that the exports rose 7.1% in August from a year earlier, slowing from an 18.0% gain in July, official customs data showed on Wednesday. The reading missed analysts’ expectations for a 12.8% increase.

It should be noted that the US Treasury yields rally to a fresh multi-day high to propel the US Dollar Index (DXY) towards renewing the two-decade top. The same joins hawkish Fed bets to weigh on the market sentiment and push USD/JPY to the fresh high in 24 years, as well as the USD/CNH towards the key 7.000 threshold.

US ISM Services PMI rose to 56.9 versus 55.1 market forecast and 56.7 prior. However, the S&P Global Composite PMI and Services PMI eased to 44.6 and 43.7 respectively versus 45.0 and 44.1 initial forecasts in that order. Even so, the US Dollar Index (DXY) rose after the release and refreshed a 20-year high. It should be noted that the CME’s FedWatch Tool signals 72.0% chance of 50 basis points (bps) Fed rate hike in September versus 57% one-day ago.

On a broader front, S&P 500 Futures that drops to the fresh low in seven weeks, down 0.55% intraday around 3,890 at the latest.

Elsewhere, WTI crude oil prices drop to the fresh low since late January, down 1.90% near $85.00 by the press time, whereas

Looking forward, the monthly prints of the US trade balance and Fed Beige Book updates could entertain investors. However, major attention will be given to the various Fed speakers scheduled for public appearances in the next two days, including Fed Chairman Jerome Powell.