Asian stocks muted as rate hike fears reemerge, China uncertainty weighs

Investing.com-- Most Asian stocks moved in a flat-to-low range on Wednesday as recent comments from Federal Reserve officials suggested that the central bank may not be done raising interest rates. 

Uncertainty over China also kept regional sentiment muted, following a string of weak economic readings from the country for October. 

While Asian markets had enjoyed a stellar rally in the wake of a less hawkish Fed from last week, they largely cooled their gains in recent sessions as investors awaited more cues from the Fed and from China.

Japan’s Nikkei 225 index rose 0.3%, while the broader TOPIX fell 0.6%. South Korea’s KOSPI fell 0.2%, somewhat stabilizing after the South Korean government’s ban on short-selling spurred wild swings in local stocks this week. 

Australia’s ASX 200 rose 0.2%, with major bank stocks benefiting from the Reserve Bank’s decision to hike interest rates. But this was largely  offset by a sharp decline in commodity stocks, as metal and oil prices plummeted this week. 

Futures for India’s Nifty 50 index pointed to a marginally positive open, with the index having somewhat lagged its peers in recent sessions. 

Chinese stocks stuck between weak data, property market hopes 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were flat on Wednesday, while Hong Kong’s Hang Seng index added 0.3% on strength in locally-listed Chinese property stocks. 

Media reports said that Chinese regulators held a symposium with several major property developers, including China Vanke Co Ltd (HK:2202), Poly Real Estate Group Co Ltd (SS:600048) and Longfor Properties Co Ltd (HK:0960), to gauge their financial positions amid a sustained decline in the property market.

The news ramped up hopes that the government will provide more support to the ailing property sector, which was hit with a series of high-profile defaults in recent years. 

But sentiment towards China still remained on edge, following weak trade data for October. Focus is now on Chinese inflation data for the month, due Thursday. 

Fed uncertainty back in play as Powell speech looms 

An overnight bounce in the dollar and Treasury yields pressured Asian stock markets, as a string of Fed officials warned that the bank could still hike interest rates further.

Less hawkish signals from the Fed, coupled with softer-than-expected nonfarm payrolls data had seen traders broadly positioning for no more rate hikes this year.

But several Fed officials contradicted this notion. Minneapolis Fed President Neel Kashkari and Governor Michelle Bowman warned that the central bank will likely need to raise rates again, amid sticky inflation and resilience in the U.S. economy.

Their comments saw markets second-guess expectations for a pause, with focus now turning to two addresses by Fed Chair Jerome Powell this week, for any more cues on monetary policy.