SYDNEY- Asian shares slipped on Tuesday as relief at a rally on Wall Street was quickly soured by a slide in US stock futures, while the euro held near one-month highs as odds narrowed on a July rate rise by the ECB.
After ending Monday firmer, Nasdaq futures lost 1.4 percent, with traders blaming an earnings warning from Snap which saw shares in the Snapchat owner tumble 28 percent.
S&P 500 futures ESc1 also slipped 0.8 percent, surrendering some of Monday’s 1.8 percent bounce.
MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent in hesitant trading. Japan’s Nikkei fell 0.4 percent and Chinese blue chips eased 0.3 percent.
Markets had taken some comfort from US President Joe Biden’s comment on Monday that he was considering easing tariffs on China, and from Beijing’s ongoing promises of stimulus.
Unfortunately, China’s zero-COVID policy, with attendant lockdowns, has already done considerable economic damage.
“Following disappointing April activity data, we have downgraded our China GDP (gross domestic product) forecast again and now look for 2Q GDP to contract 5.4 percent annualized, previously “’1.5 percent,” warned analysts at JPMorgan.
“Our 2Q global growth forecast stands at just 0.6 percent annualized rate, easily the weakest quarter since the global financial crisis outside of 2020.”
Early surveys of European and US manufacturing purchasing managers for May due on Tuesday could show some slowing in what has been a resilient sector of the global economy.
Japan’s manufacturing activity grew at the slowest pace in three months in May amid supply bottlenecks, while Toyota announced a cut in its output plans.
Analysts have also been trimming growth forecasts for the United States given the Federal Reserve seems certain to hike interest rates by a full percentage point over the next two months.
