Asian Stock Market: Struggles to cheer upbeat Japan GDP, easing US default woes

• Asia-Pacific markets edge lower despite mildly upbeat sentiment on broader front.
• S&P500 Futures print mild gains, Japan’s Nikkei 225 renews 20-month high.
• China’s NDRC hints at more investments to fueling consumption, US policymakers appear hopeful of avoiding debt payment default.
• Aussie PM cancels quad meeting on US President Biden’s actions.

Market sentiment in the Asia-Pacific zone remains mixed, mostly downbeat, during early Wednesday despite stellar performance of Japanese stocks and upbeat S&P500 Futures. The reason could be linked to traders’ doubt about the US debt ceiling extension, despite policymakers’ optimism, as well as hawkish hopes from the respective central bank. Adding strength to the cautious mood could be the geopolitical concerns surrounding Australia and China.

Amid these plays, MSCI’s index of Asia-Pacific shares outside Japan remains indecisive with minor losses whereas Japan’s Nikkei 225 rises to the fresh high since September 2021, up 0.80% intraday near 30,080 by the press time. On a broader front, S&P500 Futures print mild gains around 4,135 and defy Wall Street’s downbeat performance whereas the US 10-year and two-year Treasury bond yields print the first daily losses in four by the press time. That said, the US Dollar Index (DXY) retreats to 102.57 following Tuesday’s 0.18% intraday gain to reverse the week-start losses.

It should be noted that Japan’s upbeat preliminary reading of the first quarter (Q1) 2023 Gross Domestic Product (GDP) figures, to 0.4% QoQ versus 0.1% expected and 0.0% prior, pleases the bulls in Tokyo by posting the first quarter-on-quarter gain in three quarters.

On the same line, China’s State Planner National Development and Reform Commission of the People's Republic of China (NDRC) recently mentioned that it'll take measures to unleash consumption potential and to make continuous efforts in stabilizing and expanding manufacturing investment.

The stocks in China, Hong Kong, Australia and New Zealand, however, remain depressed amid fears of hawkish Fed and scepticism about the US diplomats’ ability to overcome the debt default fears. Additionally weighing on the risk appetite could be the headlines suggesting the cancellation of the quad meeting in Australia and mixed Aussie wage price index. “Australia Prime Minister Anthony Albanese said, per Reuters, “The leaders of Australia, the United States, India and Japan would instead meet at the G7 in Japan this weekend, after Biden cancelled a trip to Sydney on the second leg of his upcoming Asia trip, which was also to have included a visit to Papua New Guinea.”

It should be observed that the US congressional leaders’ optimism contrasts with upbeat US data and hawkish Fed talks to prod the market bulls.

Also read: S&P500 Futures recover, yields soften as US default fears diminish