Asian stocks mixed as investors react to Chinese economic data releases

SINGAPORE — Stocks in China led gains in the Asia-Pacific mixed trade on Wednesday after the release of better-than-expected Chinese economic data.

The Shanghai Composite in mainland China climbed 0.5% to close at 3,305.41 while the Shenzhen component rose 0.948% to 12,137.76.

Hong Kong’s Hang Seng Index rose 1.14% to close at 21,308.21 as shares of Alibaba jumped 4.35%.

Shares of Prada in Hong Kong, however, were down 1.5% in Wednesday trading after a survey by Oliver Wyman showed luxury brands were lowering expectations for their China business this year at the latest. following the country’s latest Covid lockdowns.

Bets are also mounting that the July FOMC will deliver another 75 basis point hike… It looks like 75 is the new 50.

Vishnu Varathan

Director of Economics and Strategy, Mizuho Bank

China’s industrial production rose 0.7% in May from a year earlier, official data showed on Wednesday, following April’s 2.9% decline. The May reading topped analysts’ expectations in a Reuters poll for a 0.7% decline.

Meanwhile, retail sales in May fell 6.7% year-on-year, better than the expected 7.1% decline analysts predicted in a Reuters poll.

“I think this data really reinforces Citi’s view…that…we may already be at the height of growth pessimism in China,” said Johanna Chua, head of economics and strategy for China. Asia at Citi Global Markets Asia.

China’s industrial production data for May came as a “big surprise”, she said.

“We expected a contraction of 1.1% [year-on-year]. So the fact that we’ve had a positive number maybe still suggests that the production side of the Chinese economy hasn’t really been so disrupted by Covid and that China continues to be, you know, pretty strong in terms of manufacturing,” Chua said.

Elsewhere in Asia-Pacific, the Nikkei 225 in Japan slipped 1.14% on the day to 26,326.16 while the Topix index fell 1.2% to 1,855.93. The South Korean Kospi fell 1.83% to 2,447.38.

The S&P/ASX 200 in Australia fell 1.27%, ending the trading day at 6,601. MSCI’s broadest index of Asia-Pacific stocks outside Japan was less than 0.1% lower.

CNBC Pro Stock Picks and Investing Trends:

Overnight on Wall Street, the S&P 500 fell deeper into bear market territory, down 0.38% to 3,735.48. The Dow Jones Industrial Average fell 151.91 points, or 0.5%, to 30,364.83. The tech-heavy Nasdaq Composite outperformed, rising 0.18% to around 10,828.35.

The moves in the U.S. came as U.S. Treasury yields rose again as investors anticipate more aggressive tightening policies from the Federal Reserve, which is expected to announce its latest interest rate decision. later Wednesday in the United States.

Markets are “convinced” that the Fed will raise rates by 75 basis points at the June FOMC meeting, Mizuho Bank’s Vishnu Varathan said in a note.

The market is betting on more than a 95% chance of a 75 basis point rate hike, the biggest hike since 1994, according to the CME Group’s FedWatch tool. 1 basis point equals 0.01%.

“Bets are also rising that the July FOMC will deliver another 75 basis point hike,” said Vishnu, the company’s head of economics and strategy. “It looks like 75 is the new 50.”

Wharton professor Jeremy Siegel told CNBC’s “Squawk Box Asia” that the market would be disappointed if the Fed only raised rates by 50 basis points, deeming the central bank to be unaggressive in reining in the tide. ‘inflation.

“The Fed needs to seize the inflation narrative…they know it’s way too late. We need to act strong right now,” said the professor of finance at the Wharton School at the University of Pennsylvania.

The benchmark 10-year Treasury yield last stood at 3.4291%, down from 3.48%, an 11-year high hit on Tuesday. The 2-year rate was 3.3648%. Yields move inversely to prices. The 2-year and 10-year Treasury yield curve briefly inverted earlier this week as investors positioned themselves for a potentially aggressive tightening of monetary policy to tame inflation.

The inversion of the yield curve is closely watched by traders and is often seen as an indicator of a possible recession to come.

Currencies and oil

The The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 104.989 after hitting an earlier high of 105.385.

The Japanese yen was trading at 134.70 to the dollar, stronger than the previous low of 135.58 against the greenback. The Aussie dollar changed hands at $0.6904, struggling to recover from last week’s fall from levels above $0.72.

Oil prices were higher in the afternoon trading hours in Asia, with international benchmark Brent futures up 0.16% at $121.36 a barrel. U.S. crude futures also rose 0.08% to $119.02 a barrel.

Previous Negative UK economic data fuels European recession fears
Next Larry Kudlow: Here are the worst economic news today