A rally in Asian shares sputtered on Thursday, pressured by a pullback in Chinese stocks and higher U.S. yields amid fears the Federal Reserve will keep raising interest rates to combat sticky inflation.
European markets are likely to open flat, with pan-region Euro Stoxx 50 futures largely unchanged, as caution set in ahead of the release of European inflation data for February.
Median forecasts are for an annual figure of 8.2%, but risks are on the upside following surprises from France, Spain and Germany.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) lost 0.4%, unwinding some of the 2.1% gain in the previous session – the index’s best day in two months. Japan’s Nikkei (.N225) was largely flat.
Hong Kong’s Hang Seng Index (.HSI) retreated 0.8%, after registering its biggest daily gain in nearly three months on Wednesday when it jumped 4.2% on the back of unexpectedly robust readings from China PMI surveys.
Investor enthusiasm has faded somewhat over China’s economic reopening after Beijing dismantled its strict COVID-19 controls in December, as analysts look for more evidence to gauge the pace of economic recovery.
China’s annual meeting of the National Party Congress may provide more stimulus clues when it kicks off this weekend to set economic targets and elect new top economic officials.
“Financial markets are caught between the two narratives of a softer landing, helped by China’s reopening, and sticky inflation keeping policy rates higher for longer,” said Chris Turner, global head of markets at ING.
Investor enthusiasm has faded somewhat over China’s economic reopening after Beijing dismantled its strict COVID-19 controls in December, as analysts look for more evidence to gauge the pace of economic recovery.
China’s annual meeting of the National Party Congress may provide more stimulus clues when it kicks off this weekend to set economic targets and elect new top economic officials.
“Financial markets are caught between the two narratives of a softer landing, helped by China’s reopening, and sticky inflation keeping policy rates higher for longer,” said Chris Turner, global head of markets at ING.
SOURCE: REUTERS
