Asian stocks sink as post-Fed rally cools; China trade, RBA in focus
Investing.com-- Asian stocks retreated on Tuesday after four straight days of gains as investors awaited more economic cues from China and Australia, while South Korean shares saw a heavy dose of profit taking.
South Korea’s KOSPI sank 2.6%, leading losses in the region as investors locked in profits from an over 4% jump in the prior session. The KOSPI marked its best day in over three years after the South Korean government banned short-selling until end-June 2024.
But given that the underlying fundamentals for South Korean markets- specifically slowing economic growth and weakening demand in China- remained the same, the KOSPI quickly reversed most gains.
Broader Asian markets were also hit with a measure of profit taking, as markets somewhat reconsidered expectations that the Federal Reserve will pause its current rate hike cycle.
Overnight comments from Fed officials struck a hawkish note, particularly as Minneapolis Fed President Neel Kashkari warned that the central bank may not be done raising rates.
Expectations of a pause in the Fed’s rate hikes, especially after weaker-than-expected payrolls data, had spurred strong gains in global stock markets over the past four sessions.
But Treasury yields rebounded on Monday following Kashkari's comments, giving Wall Street indexes a muted session and providing a weak lead-in to Asian markets.
Japan’s Nikkei 225 index fell 0.9% on Tuesday after rallying around 6% over the past four sessions, while futures for India’s Nifty 50 index pointed to a weak open.
Chinese markets fell before key trade data from the country, due later in the day. China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.7% and 0.5%, respectively, while losses in heavyweight
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