Asian Equities Decline on China Losses and Fed Cut Doubts – Asia Market Wrap

China led the decline in most Asian equity indices following the release of robust US retail sales data that further put doubt on the possibility of a March rate drop by the Fed.

As authorities struggle to reverse a deepening housing slump and stubborn deflationary pressures, China’s major stock market has become the worst-performing in the world in the new year. The Shanghai Composite Index slipped below 2,800 to the lowest level since 2020 as authorities signalled they will avoid huge stimulus to revive growth.

US stock futures moved lower, while Japan’s shares fell as the yen reversed a three-day loss and worries mounted that the stocks would overheat following a good start to the year. The restrained view for China and the repricing of anticipated Fed cuts have subtracted 2% from global equities this year.

After more selling on Wednesday, which was focused on the short end of the curve, Treasuries rebounded in Asian trading. The yield on the policy-sensitive two-year increased by 14 basis points, the most in one day since June, and the yield on the 10-year increased by 4 basis points, moving above 4.1% for the first time in over a month.

A barometer of the greenback was on set to record its first fall in five days, while the Australian dollar remained stable following a report that showed the nation’s employment unexpectedly plummeted in December.