Asian stocks flat, Chinese markets rise on recovery hopes

Most Asian stocks moved slightly on Monday amid hawkish comments from Federal Reserve officials, while Chinese markets outperformed as the People’s Bank maintained medium-term lending rates ahead of a swathe of data indicators.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes climbed nearly 0.8% each after the PBOC maintained its medium-term lending rate facility at 2.75%, keeping monetary policy stable ahead of a critical first-quarter GDP estimate coming on Tuesday.

The report is expected to demonstrate that Chinese economic growth returned after the country dropped most anti-COVID regulations. Analysts at ING stated that the PBOC’s move on Monday suggested that the bank was “not particularly worried about the recovery of the Chinese economy.”

But the central bank continued to hand out liquidity measures, given that several parts of the economy are still battling to revive. ING economists also cautioned that a rise in GDP likely be limited.

Chinese industrial production and retail sales data is also coming on Tuesday, and is expected to shed more light on an economic revival. The PBOC is also likely to decide on its main loan prime rate later this week.

While a resurgence in China bodes well for Asian economies, worldwide markets were quiet on Monday after Fed Governor Christopher Waller expressed a hawkish forecast on interest rates on Friday.

Uncertainty over rising U.S. rates dragged on Asian markets, even as a bevy of regional central banks suspended their individual tightening cycles, amid signs of softening inflation and slowing economic growth.

Japan’s Nikkei 225 index was flat, while Hong Kong’s Hang Seng and the Taiwan Weighted index climbed 0.1% apiece.

Risk-heavy Southeast Asian markets plummeted the most, with Philippine stocks falling 0.8%.

Australia’s ASX 200 index climbed 0.2%, with interest also shifting to the minutes of the Reserve Bank’s April meeting, coming later this week. The bank had suspended its current rate rise cycle during the meeting.

The U.S. earnings season is also in focus, as investors seek to measure the full impact of high interest rates and inflation on company profitability.