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Asian Stocks Affected by Rate Hike Fears and Chinese GDP Growth

China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes experienced sideways trading following data that revealed an impressive 4.5% growth in the Chinese economy during Q1 2023. This growth can be attributed to the lifting COVID-19 restrictions earlier in the year.

Asian Stocks
Asian Stocks

Uneven Rebound in Industrial Production

Despite the promising GDP growth, other data showed an uneven economic rebound. Industrial production in China missed estimates for the second consecutive month in March, indicating that the country's manufacturing sector is struggling to recover from the impacts of the pandemic.

Hong Kong Property Stocks Underperform

Hong Kong's Hang Seng index fell 0.8%, with property stocks experiencing the most significant losses. This decline was prompted by data showing slowed investment in China's real estate sector during Q1, even though COVID-19 restrictions were lifted.

Strong Retail Sales Support Recovery

Encouraging retail sales data suggests that a consumption-driven recovery in the Chinese economy is progressing, which should benefit exporters to China shortly.

Asian Markets React to Rising US Interest Rates

Fears of increasing U.S. interest rates caused most Asian markets to trade in a flat-to-low range. South Korea's KOSPI dropped 0.3%, while the Philippine Composite Index led losses in Southeast Asia with a 0.6% decrease.

Australian Market Affected by Central Bank's Rate Hike Potential

Australia's ASX 200 index declined 0.3% following the release of the Reserve Bank's April meeting minutes, which suggested that the bank may raise rates further despite a recent pause announcement.

Uncertainty Over Federal Reserve's Rate Hike Cycle

Growing uncertainty surrounding the Federal Reserve's rate hike cycle has negatively impacted broader market sentiment. Higher interest rates limit foreign liquidity and make risk-driven assets less appealing, posing challenges for Asian markets.

Asian Stocks May Find Support from Central Banks

With most Asian central banks pausing their rate hike cycles, there is potential for Asian stocks to find some support in the near term.

Japan's Nikkei 225 Benefits from Bank of Japan's Stance

Japan's Nikkei 225 index rose 0.6%, outperforming other markets after new Bank of Japan Governor Kazuo Ueda indicated that the bank will maintain ultra-low interest rates for now.