Asian Stock Market: Grinds lower on mixed China, Japan data and mildly bid S&P500 Futures

• Markets in Asia-Pacific region remain sluggish, downbeat of late amid mixed catalysts.
• China prints unimpressive PMIs, Japan inflation cools but intervention fears loom.
• Equities from Beijing stick to mild gains, S&P500 Futures trace Wall Street even as yields retreat.
• Fed’s preferred inflation gauge eyed for clear directions.

The Asia-Pacific stock market remains dicey during early Friday as mixed data from the regional leader China and Japan jostles with hawkish Fed and upbeat S&P500 Futures. It’s worth noting that the quarter-end flows also challenge the fund flow in equities amid a cautious mood ahead of the key US Core Personal Consumption Expenditure (PCE) Price Index for May, also known as the Federal Reserve’s (Fed) favorite inflation gauge.

While portraying the mood, the MSCI’s index of Asia-Pacific shares outside Japan remains pressured around a weekly low, down 0.08% intraday at the latest. That said, Japan’s Nikkei 225 drops half a percent whereas China-linked shares are mostly up. Further, shares in Australia are mildly offered but those from Auckland rise lead the bulls. It should be observed that markets in Indian and South Korea are firmer of late but those from Indonesia remain lackluster.

It should be noted that the Wall Street benchmarks printed gains the previous day and S&P500 Futures also mark a minor upside of late while the US 10-year and two-year Treasury bond yields seesaw at the highest levels since early March, marked the previous day. Furthermore, the Oil price stays firmer but Gold struggles around the lowest levels in months as we write.

That said, market sentiment improved the previous day as upbeat US data defied recession woes. The optimism jostled with the hawkish Fed talks and hence restrict the S&P500 Futures gains, which in turn also challenge the Asian stocks. Furthermore, fears of the US-China tension and mixed data at home, not to forget the looming woes of Japan’s market intervention, keeps the traders worried.

Earlier in the day, China’s headline NBS Manufacturing PMI matches 49.0 market forecasts in June versus 48.8 expected while the Non-Manufacturing PMI rose past 50.2 analysts’ estimations to 53.2, compared to 54.5 previous readings, during the said month. Furthermore, Tokyo Consumer Price Index (CPI) eased to 3.1% YoY in June versus 3.8% expected and 3.2% prior whereas the preliminary readings of May’s Industrial Production slumped to -1.6% MoM from 0.7% prior and -1.0% market forecasts. It’s worth noting that the yearly Industrial Production figures came in upbeat, to 4.7% versus -0.7% prior while the Unemployment Rate for June remains unchanged at 2.6%.

Elsewhere, mixed headlines about the US-China ties also prod the sentiment as US Treasury Secretary Janet Yellen ‘hopes’ to visit China to re-establish contacts but also showed readiness to take actions to protect national security interests even at an economic cost. It should be noted that the US restrictions on China's AI industry players and Beijing’s tweak to foreign policy, allegedly to tame the US power, seem to test the bulls.

Above all, lack of clarity and cautious mood ahead of the key data/events keep the Asian inventors inactive.

Also read: Forex Today: US economic data supports the Dollar, more inflation data ahead