Asian Stock Market: Bulls and bears jostle ahead of Fed

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  • Asian equities trade mixed, mostly pressured, as US stock futures fail to impress bulls.
  • Xi-Biden talks, pre-Fed consolidation defend bulls even as recession woes weigh on sentiment.
  • Wall Street closed in the red as key companies propelled slowdown fears, yields rebound.
  • US data, risk catalysts may entertain investors ahead of FOMC.

Market sentiment in the Asia-Pacific region fades the US session pessimism as traders remain divided over the Fed’s next move amid recession fears. Also contributing to the investors’ indecision could be the lack of major data/events, except for Australia’s inflation numbers.

While portraying the mood, the MSCI’s index of Asia-Pacific shares outside Japan drops 0.80% intraday whereas Japan’s Nikkei 225 adds 0.40% intraday to 27,745 by the press time.

It’s worth noting that Australia’s ASX 200 prints mild gains as Aussie Q2 Consumer Price Index (CPI) missed hawkish market expectations. New Zealand’s NZX 50 adds 0.30% gains on a day amid the absence of risk-aversion and firmer US stock futures, not to forget cautious optimism surrounding the US President’s readiness for a virtual meeting with his Chinese counterpart Xi Jinping. Even so, Chinese equities remain depressed while tracking the Wall Street benchmarks. It’s worth noting that firmer prints of China’s Industrial Profits in June also couldn’t impress equity bulls in China.

Elsewhere, South Korea’s KOSPI and Indonesia’s IDX Composite fail to pare recent losses, struggling for fresh clues of late. On the other hand, India’s BSE Sensex snaps a two-day downtrend as traders brace for the Federal Open Market Committee (FOMC) meeting.

On a broader front, Wall Street closed in the red and the US Treasury yields remained mostly pressured while portraying the biggest difference between the 2-year and the 10-year bond coupons since the year 2000, which in turn highlighted the rush towards risk-safety. It should be noted that the S&P 500 Futures rise 0.8% intraday while the US 10-year Treasury yields rise 2.0 basis points (bps) to 2.80% at the latest.

Looking forward, headlines surrounding the US and China talks will join the Durable Goods Orders for June, expected -0.4% compared to 0.8% prior, to entertain traders. However, major attention will be given to Fed’s verdict and Chairman Jerome Powell’s press conference.

Also read: S&P 500 Futures, yields rebound as hints of Biden-Xi talks trigger cautious optimism ahead of Fed