Asian stocks struggled for traction as investors weighed concerns about the health of the US economy against stronger expectations for early Federal Reserve policy easing.
Shares declined in Japan, South Korea and Australia while those in Hong Kong and mainland China gained. US equities futures were flat. The dollar stabilized after weakening against most of its major and Asian peers earlier.
Treasuries steadied in Asia after Monday’s rally following data that showed US factory activity shrank at a faster pace. The benchmark 10-year yields edged up two basis points at 4.41% after sinking 11 basis points previously. Australian and New Zealand government debt rose.
The mixed picture across asset classes suggests investors may be waiting for more US data, such as Friday’s crucial jobs figures, for more clues about the outlook of the world’s No. 1 economy and its central bank.
While the latest soft US manufacturing data revived bets for the Fed to cut rates sooner, it also raised concerns about the potential drag on Asian economies. “Yesterday was a cracking day for the region, a very big bounce. So we’re searching for fresh impetus now,” said Kyle Rodda, a senior market analyst at Capital.Com Inc. “There’s certainly some weakness in cyclicals after the soft ISM Manufacturing data, and that disproportionately impacts Asian stocks.”
