Asian stocks drift higher, China sinks on disappointing data

Investing.com -- Most Asian stocks rose slightly on Friday, recovering a measure of recent losses as markets awaited more cues on a brewing U.S. banking crisis, while softer-than-expected economic readings saw Chinese markets lag their peers.

Trading volumes were somewhat muted on account of market holidays in Japan and South Korea.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.5% and 0.7%, respectively, as a private survey showed that growth in the country’s service sector unexpectedly slowed in April.

While growth still remained close to a three-year peak, the reading, coupled with a surprise contraction in the manufacturing sector, drummed up concerns that a post-COVID economic rebound in the country was running out of steam.

The Chinese government outlined more moves to support private investment in the country, which has remained sluggish this year even after the country relaxed most anti-COVID measures.

But investors remain doubtful over the breadth of an economic recovery this year, given that the manufacturing sector - which is a key driver of growth - remains under pressure.

Broader Asian markets crept higher on Friday, recovering from steep losses earlier this week as a selldown in U.S. stocks spilled over. But most regional bourses were still headed for weekly losses.

Technology-heavy indexes rose the most, tracking strong results from iPhone maker Apple Inc (NASDAQ:AAPL). Hong Kong’s Hang Seng index added 0.7%, while the Taiwan Weighted index rose 0.4%.

Asian bank stocks still remained under pressure from fears of contagion from a brewing U.S. crisis. After the collapse of First Republic earlier this week, markets feared that its peers PacWest Bancorp (NASDAQ:PACW) and Western Alliance (NYSE:WAL) could be the next dominoes to fall.

A tapering in the U.S. Federal Reserve’s hawkish stance this week did little to boost Asian markets, as the central bank also warned of cooling economic growth this year. Markets are also awaiting nonfarm payrolls data later in the day for more cues on monetary policy.

Australia’s ASX 200 index was somewhat of an outlier for the day, rising 0.3% on stronger-than-expected results from major bank ANZ Group Holdings Ltd (ASX:ANZ). ANZ’s shares jumped nearly 2%.

But the bank still warned of a credit slowdown in the coming months, as Australian consumers grapple with high interest rates and inflation.

India’s Nifty 50 index fell 0.5% in early trade on losses in heavyweight bank stocks, as markets feared potential exposure to the recent Go First airline bankruptcy.