Asian stocks sink as BOJ, Fed meetings approach; China shares hit 6-mth low

Investing.com-- Most Asian stocks fell on Tuesday, reversing a rebound from the prior session as sentiment remained on edge before interest rate decisions from the Bank of Japan and the Federal Reserve in the coming days. 

Chinese markets continued to lag their peers, with local benchmarks hitting six-month lows as concerns over a slowing economic recovery showed few signs of easing. 

Regional markets took middling cues from Wall Street, which ended flat on Monday as caution over the central bank meetings kept investors from making big bets. 

U.S. stock index futures fell in Asian trade ahead of Wednesday’s Fed rate decision, while a slew of heavyweight technology earnings were also in focus.

Japanese stocks sink amid uncertainty over BOJ 

Japan’s Nikkei 225 index fell 0.9% as did the broader TOPIX, amid uncertainty over the BOJ’s upcoming rate decision.

Analysts were largely split over a potential rate hike by the BOJ, following some mildly positive readings on inflation in the past two months. But underlying inflation- which is a key factor for the BOJ’s rate decisions- remained well below the bank’s 2% annual target. 

Forecasts for the BOJ meeting ranged from a hold to a hike of 10 or 15 basis points.

But apart from the rate decision, uncertainty also persisted over the BOJ’s plans to begin tapering its quantitative easing programs. The bank had said it will elaborate on its plans during its July meeting. 

An end to QE heralds less support for Japanese stock markets, with the BOJ set to taper down its asset purchases.

China stocks test 6-mth low, PMIs awaited 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 0.9% and 0.8%, respectively, with both indexes at their lowest levels since early-February. Hong Kong’s Hang Seng index slid 1.2% to an over three-month low. 

Chinese stocks saw an extended rout through July as concerns over a slow economic recovery were exacerbated by middling signs on stimulus from Beijing. 

Uncertainty over what the trajectory of the U.S. presidential race, with regards to U.S.-China trade relations, also kept traders averse to Chinese markets. 

Focus this week is squarely on a string of purchasing managers index readings from China, which are set to offer more cues on Asia’s largest economy. 

Broader Asian markets retreated, with technology stocks dropping in anticipation of earnings from Microsoft Corporation (NASDAQ:MSFT), Apple Inc (NASDAQ:AAPL), Meta Platforms Inc (NASDAQ:META) and Amazon.com Inc (NASDAQ:AMZN) later this week.

South Korea’s KOSPI lost 1%, while Taipei shares of TSMC (TW:2330), the world’s biggest contract chipmaker, shed 1.5%. 

Australia’s ASX 200 fell 0.8%, retreating before a consumer price index inflation reading for the second quarter. Monthly CPI indicators through the quarter herald a strong reading on Wednesday, which gives the Reserve Bank more impetus to keep rates high, or even potentially hike further. 

Futures for India’s Nifty 50 index pointed to a negative open, after the index clocked wild swings in recent sessions as it struggled to make new highs above 25,000 points.