Asian stocks demonstrated resilience on Wednesday as investors anticipated policy directions from Beijing during its annual parliamentary session. Disappointment lingered from the absence of significant stimulus measures in the prior session, influencing the cautious optimism observed in the markets. Meanwhile, gold and bitcoin experienced slight declines after reaching record highs.
Traders exercised restraint, refraining from major commitments, as they awaited Federal Reserve Chair Jerome Powell’s congressional testimony later in the day. Powell’s remarks would be closely scrutinized to discern the potential timing of U.S. central bank interest rate cuts.
Chinese stocks exhibited mixed performance following Beijing’s announcement of a 5% growth target for 2024 at a parliamentary meeting, lacking substantial stimulus measures. While the blue-chip CSI 300 Index dipped by 0.08%, Hong Kong’s Hang Seng surged 2%, rebounding from a 2.5% decline on the previous day.
Mansoor Mohi-uddin, Chief Economist at the Bank of Singapore, remarked, “The 2024 (China) economic targets still show officials are unwilling to quickly reflate the economy given concerns about excessive debt and the weakness of the yuan.”
Investors eagerly await an economy-focused press conference on Wednesday, where representatives from the People’s Bank of China and other regulators may provide further policy details.
The Asian trading session was lackluster initially, with MSCI’s broadest index of Asia-Pacific shares outside Japan slipping before reversing course to trade 0.46% higher.
On Wall Street, major indexes retreated more than 1% on Tuesday, primarily influenced by weakness in megacap growth companies like Apple and the chip sector, weighing down the tech-heavy Nasdaq.
Looking ahead, European bourses are poised for a slightly higher open, with key events including the UK government’s budget announcement, where Finance Minister Jeremy Hunt aims to cut taxes without upsetting bond markets.
In the U.S., recent data revealed a slowdown in the services sector’s expansion and a steeper-than-expected drop in new factory orders, with the spotlight now on upcoming payroll data later in the week.
U.S. Treasury yields steadied after dipping to a one-month low, with markets closely monitoring economic data and policymakers’ speeches for signals on the potential timing of Fed rate cuts. The CME FedWatch tool indicates a 68% chance of the Fed initiating its easing cycle in June.
The Japanese yen strengthened to 149.93 per dollar, while sterling remained flat ahead of Britain’s budget announcement. The euro held steady at $1.0853 before the European Central Bank’s policy decision on Thursday.
Cryptocurrency markets witnessed bitcoin hovering around $66,000, following a record high of $69,202, fueled by increased investments in U.S. spot exchange-traded crypto products.
Spot gold experienced fluctuations, settling at $2,127.36 an ounce after reaching an all-time high of $2,141.59 on Tuesday.
In the energy market, U.S. crude rose 0.29% to $78.38 per barrel, while Brent was at $82.27, up 0.28% on the day.
