Market Wrap: 18 April 2023

Market Wrap: 18 April 2023

Most Asia Stocks Fall as China Growth Seen Uneven:

  • Muted moves following China data show markets not convinced
  • China property investment is still lagging: Forsyth Barr Asia

Most Asian stocks dropped as investors focused on patches of weakness in China’s economic data even as the overall picture was solid. The possibility of further Federal Reserve policy tightening also weighed on sentiment.

Shares in mainland China eked out tiny gains, while benchmarks in Hong Kong, South Korea and Australia all declined. China’s economy grew at a faster pace last quarter than economists forecast as consumers ramped up spending, but the recovery was uneven with industrial activity relatively subdued.

Futures for European contracts pointed to gains, while US equity contracts were little changed.

The yuan strengthened following the China data before giving back part of its gains as caution resurfaced. The dollar weakened against all its Group-of-10 peers, snapping a two-day rally. Government bonds fell in Australia and New Zealand after Treasuries dropped on Monday.

Most of the major China “numbers beat estimates, especially GDP and retail sales but property investment is still lagging and misses expectations,” said Willer Chen, senior analyst at Forsyth Barr Asia Ltd. in Hong Kong. That “echoes with broader concerns that the property market rebound could be a short-lived one as investments are not picking up,” he said.

Treasuries were little changed in Asia, with the two-year yield holding just below 4.2%. Richmond Fed President Thomas Barkin said he wants to see more evidence that US inflation is easing back to the central bank’s goal of 2%. New York state manufacturing activity unexpectedly expanded in April for the first time in five months as new orders and shipments snapped back.

The possibility of further Fed policy tightening had pushed up Treasury yields and constrained US stocks on Monday, with the S&P 500 erasing losses in afternoon trading and the tech-heavy Nasdaq 100 underperforming major equity benchmarks. 

Australia’s dollar rose after minutes of the central bank’s April meeting showed members discussed a quarter-point hike before deciding on a pause. Meanwhile, Indonesian policymakers are expected to keep their benchmark unchanged later Tuesday. 


A gauge of cross-asset volatility remained at 14-month low, reflecting a growing assurance that the worst of the banking turmoil and US rate hikes may be over. The VIX Index, another volatility measure, remained below 17, its lowest since the start of last year.

Still, US bank earnings on Monday didn’t entirely relieve investor nervousness that the sector can quickly bounce from turmoil that roiled several lenders earlier this year, as a so-called earnings recession in the world’s biggest economy looms.  

“The risk-reward for equities does not look attractive into the second half in light of risk-free hurdle rate at 5%,” JPMorgan Chase & Co. strategists including Marko Kolanovic wrote in a note. “The main disconnect revolves around the hopes of a soft landing with inflation coming down quickly.”

Elsewhere, oil rose on growth data from China and gold ticked higher.



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