Asian stocks skittish as rate-cut hopes wane, China plumbs 5-year lows
Investing.com-- Most Asian stocks kept to a tight range on Thursday as strong U.S. data further dented bets on early interest rate cuts by the Federal Reserve, while a rout in Chinese shares worsened in the wake of disappointing GDP readings.
Regional markets took a weak lead-in from Wall Street after stronger-than-expected retail sales data saw traders further trim bets on a March rate cut.
The data lent further credence to comments from Fed officials that U.S. rates will remain higher for longer, amid relative resilience in the economy. Such a scenario bodes poorly for risk-driven markets, and is likely to limit foreign capital inflows to Asian stocks in the near-term.
Most Asian markets were also reeling from a steep sell-off on Wednesday, following weaker-than-expected growth data from the region’s biggest economy.
China’s Shanghai Shenzhen CSI 300 sank 0.8% on Thursday and was at its weakest level in nearly five years, while the Shanghai Composite slid 1.3% to a near four-year low. Losses in mainland stocks kept Hong Kong’s Hang Seng index trading at its worst level since late-2022.
Thursday’s losses marked a worsening rout in Chinese markets after data in the prior session showed Asia’s largest economy grew less than expected in the fourth quarter.
GDP barely edged past the government’s annual 5% target, with a bulk of the growth coming only from a lower base for comparison from 2022. The readings indicated sustained weakness in the Chinese economy after a post-COVID rebound largely failed to materialize in 2023.
Chinese stocks remained in free-fall though most of 2023, and were the worst performers in Asia for the year. This trend showed little signs of improving in recent sessions, with Beijing’s reluctance
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