Stocks in Asia fell on Friday as fresh economic weakness in China and uncertainty over US interest rates weighed on investor sentiment.
According to data from China, home sales fell in April at a faster pace than the prior month, and consumption unexpectedly slowed, signaling potential trouble for the world’s second-largest economy. This news, coupled with ongoing geopolitical tensions and weak credit and inflation data, led to a drop in A-share investor sentiment, according to Morgan Stanley strategists.
In Hong Kong, the Hang Seng Index fluctuated near a nine-month high, with robust results from Alibaba Group Holding Ltd. and Baidu Inc. supporting the market. Meanwhile, US equity futures were relatively unchanged following a small decline on Wall Street the previous day.
The yen weakened against the dollar after the Bank of Japan left bond buying amounts unchanged, leading some to speculate that the central bank may raise interest rates three more times this year. Treasuries were stable in Asian trading, while Australian and New Zealand yields rose.
Traders are closely watching for further support for China’s property sector, including a potential plan to clear excess inventory. Key officials are set to meet to discuss such a plan, as concerns about the country’s economic recovery persist.
Overall, caution in risk assets reflected a reassessment of Federal Reserve rate cut expectations, with traders now expecting just one cut fully priced in this year. Three Fed officials suggested that borrowing costs should remain high for longer as they await more evidence of easing inflation.
Commodities saw broad gains, with West Texas Intermediate climbing and gold remaining steady. Bitcoin also traded above $65,000 after halting a decline in the prior session.
In the markets, S&P 500 futures were flat, Japan’s Topix rose, Australia’s S&P/ASX 200 fell, and Hong Kong’s Hang Seng Index rose. The euro and the yen were relatively stable against the dollar, while cryptocurrencies like Bitcoin and Ether saw modest gains.
Overall, the market remains cautious as investors navigate economic uncertainties and shifting interest rate expectations.
