HONG KONG- Asian stocks wobbled on Tuesday as investors held tight ranges awaiting clues on the interest rate outlook and wary of risks about China’s shaky economic recovery and developments in Russia after an aborted mutiny.
MSCI’s gauge of Asia Pacific stocks outside Japan was up 0.08 percent, after dropping 0.06 percent an hour earlier. Japan’s benchmark Nikkei average fell as much as 1 percent.
“Asian equities are set for a downturn on Tuesday, prompted by Wall Street’s risk-aversion behavior,” said Anderson Alves, a global macro analyst at ActivTrades.
All three major US stock indexes ended in the red on Monday, with megacap momentum stocks pulling the tech-heavy Nasdaq down the most.
The Dow Jones Industrial Average fell 0.04 percent, the S&P 500 lost 0.45 percent and the Nasdaq Composite dropped 1.16 percent.
“It’s significant to mention that a sense of caution prevails among investors with respect to the global economy’s trajectory over the forthcoming months,” Alves said. “The threat of a potential recession during a high-interest rate cycle, enforced by central banks, could significantly impact both the US and Europe, thereby influencing global trade, financing conditions, and demand.”
Hang Seng Index and China’s benchmark CSI300 Index opened up 0.3 percent and 0.1 percent, respectively, shaking off losses from the past four sessions.
S&P Global on Monday cut its forecast for China’s economic growth to 5.2 percent in 2023, down from an earlier estimate of 5.5 percent, underscoring the uneven nature of the country’s recovery from the pandemic.
It was the first time a global credit ratings agency has cut China’s forecast this year and follows lowered predictions by major investment banks including Goldman Sachs.
Redmond Wong, market strategist Greater China at Saxo Markets, said investors are also closely watching end-of-quarter rebalancing flows in US stocks
“The impending rebalancing is expected to have a notable impact on the market dynamics, as traders prepare for potential shifts in stock prices and overall market sentiment,” Wong said. “With the month and quarter end coinciding, the magnitude of these rebalancing flows adds an element of anticipation and uncertainty for market participants.”