On Monday (15th May), the majority of Asian stock markets experienced a decline as investors adopted a cautious approach in anticipation of several economic reports from China. Additionally, they awaited signals regarding monetary policies from various Federal Reserve speakers scheduled later in the week.
Among the Asian markets, China's Shanghai Composite index witnessed the largest decrease, with a decline of 1.1%. This poor performance was due to significant losses in local industrial, shipping, and media stocks, reflecting diminishing optimism surrounding the country's economic recovery.
The Shanghai Shenzhen CSI 300 index, which includes leading stocks in China, experienced a decline of 0.4%. Investors are currently in waiting as they anticipate the release of industrial production, retail sales, and fixed asset investment data from China, scheduled for Tuesday(16th May). While there are expectations of some improvement in April compared to the previous month, it is worth noting that recent economic data from China has been disappointing, as Chinese imports, inflation, and manufacturing activity all contracted in April. These indicators suggest that the post-COVID rebound in the Chinese economy may be losing momentum.
The negative performance in China had a dampening effect on the overall sentiment across Asian markets, as China serves as a significant trading hub for the region. Hong Kong's Hang Seng index remained flat on Monday, while South Korea's KOSPI and Taiwan's Weighted index both experienced a 0.3% decline.
Australia's ASX 200 index lost 0.1% due to data indicating a continued decrease in building approvals, signaling ongoing weakness in the country's housing market. This decline in the housing market had a particular impact on heavyweight bank stocks.
On a positive note, shares of Newcrest Mining Ltd, the largest gold miner in Australia, saw a 1.2% increase in value. This rise followed a recommendation from its board to accept a $17.8 billion takeover offer from U.S. miner Newmont Corp.
Asian markets were influenced by the weak performance of Wall Street, which was driven by lower-than-expected consumer sentiment data on Friday (12th May). This data indicated a slowdown in growth for the largest economy in the world, as it grapples with high interest rates and persistent inflation.
This week, market focus will shift to important data on U.S. industrial production and retail sales, providing further insight into the state of the global economy. Additionally, investors are eagerly awaiting speeches from several Federal Reserve officials, with Fed Chair Jerome Powell's speech on Friday being particularly anticipated. These speeches are expected to provide more clarity on monetary policy, as expectations grow that the Fed will maintain higher interest rates for a longer period.
In contrast to the overall trend, Japan's Nikkei 225 index recorded a 0.7% increase. This positive performance was influenced by softer-than-expected producer inflation data, suggesting reduced pressure on the Bank of Japan to tighten its policy this year. Furthermore, Japan's sentiment was boosted by strong first-quarter earnings results.
In early trading, India's Nifty 50 index saw a 0.2% rise, as investors awaited data on wholesale price inflation in April.
