Jan 18, 2024: Many Asian stocks maintained a narrow trading range on Thursday as robust U.S. data further diminished expectations of early interest rate cuts by the Federal Reserve. Concurrently, Chinese shares continued to plummet, reaching multi-year lows following disappointing GDP readings.
Regional markets were influenced by Wall Street’s performance, where stronger-than-expected retail sales data led traders to scale back bets on a March rate cut by the Federal Reserve. The data reinforced statements from Fed officials indicating that U.S. interest rates would remain elevated for an extended period, negatively impacting risk-driven markets and potentially limiting foreign capital inflows into Asian stocks.
The majority of Asian markets also faced the aftermath of a significant sell-off on Wednesday, triggered by below-expectation growth data from China, the largest economy in the region.
In China, the Shanghai Shenzhen CSI 300 declined by 0.8% on Thursday, reaching its lowest level in nearly five years. Meanwhile, the Shanghai Composite dropped 1.3%, hitting a near four-year low. The extended losses in mainland Chinese stocks maintained Hong Kong’s Hang Seng index at its lowest level since late 2022.
The intensified downturn in Chinese markets followed data from the previous session revealing that Asia’s largest economy experienced lower-than-expected growth in the fourth quarter.