Chinese Stocks Fall Ahead of Bank Earnings, Asian Markets Mixed

By Ambar Warrick 

Investing.com-- Chinese stocks fell on Tuesday ahead of earnings reports from some of the biggest banks in the country, while most other Asian markets were mixed as concerns over a hawkish U.S. Federal Reserve persisted.

China’s bluechip Shanghai Shenzhen CSI 300 index fell 0.6%, while the Shanghai Composite index lost a similar amount. 

Investors were awaiting earnings reports from Industrial and Commercial Bank of China Ltd (SS:601398), China Construction Bank Co (SS:601939), and Bank of China (SS:601988). Shares of the three moved little on Tuesday.

Major bank earnings are expected to provide further clarity on to what extent China’s economic slowdown has impacted its major banks. COVID-19 lockdowns, a brewing debt crisis in the real estate sector, and more recently, a drought-driven energy crunch have severely dented Chinese economic activity this year.

This spurred several stimulus measures from the government, including several interest rate cuts by the People's Bank of China. But this may end up further pressuring bank margins. 

Agricultural Bank of China Ltd (SS:601288) reported slightly stronger earnings on Monday, but logged a rise in property-related non-performing loans. Shares of the firm - China’s third-largest commercial lender by assets - rose 0.3% on Tuesday.  

Broader Asian markets were mixed, following a weak lead-in from Wall Street. U.S. stocks ended lower on Monday as losses in heavyweight technology shares vastly outweighed a recovery in other sectors.

The tech sector is under renewed pressure from rising Treasury yields, after the U.S. Fed struck a hawkish tone on its plans for interest rate hikes this year. 

Focus is now on upcoming U.S. payrolls data on Friday, which is likely to sway the central bank’s plans for tightening policy. 

Hong Kong’s tech-heavy Hang Seng index slumped 1.2% and was the worst performer in Asia on Tuesday. Majors Alibaba (HK:9988), Baidu Inc (HK:9888) and Tencent Holdings Ltd (HK:0700) lost between 1.2% and 2%. Baidu (NASDAQ:BIDU) is also set to report its earnings later in the day. 

Japanese stocks rose 1%, recovering sharply from Monday’s losses. Data showed the country’s unemployment rate was steady at 2.6% in July.