MSCI's broadest index of Asia-Pacific shares outside Japan
slid 1.34%, touching a fresh one-month low and on course for its weakest weekly
performance since August. The index is down 3% for the week.
China stocks fell sharply after data showed China's economy
grew 5.2% in the fourth quarter from a year earlier, missing analysts'
expectations slightly but still ensuring Beijing met its annual growth target
of around 5%.
December activity indicators released along with the GDP
data showed retail sales grew at the slowest pace since September, while
investment growth remained tepid, though industrial output showed signs of
improvement.
China's blue-chip stock index was down more than 1% in early
morning trade, hovering near the lowest level since early 2019. Hong Kong's
Hang Seng index slumped 2.5%.
The series of China's economic data releases today seem to
reflect more of the same an uneven growth environment, which does not offer
much conviction of a sustained turnaround just yet," said Jun Rong Yeap, a
market strategist at IG in Singapore.
"The trend of weak economic data suggests that the
accommodative policy environment has yet to translate to a sustained turnaround
in economic conditions, which may amplify call for more supportive intervention
by authorities in first half of 2024."
Meanwhile, Japan's Nikkei shrugged off the broader malaise
and rose to a new 34-year peak. It was last up 0.5% having surged over 1% in
early trading.
Investor enthusiasm was also dampened by the hawkish
rhetoric from central bank officials, pushing back against expectations of
early rate cuts.
U.S. Federal Reserve Governor Christopher Waller said on
Tuesday that while inflation was approaching the central bank's 2% goal, the
Fed should not rush to lower interest rates until lower inflation can clearly
be sustained.
Waller's comments echoed sentiments of European central
bankers.
"Waller's comments were reflected in rate markets, with
markets seemingly becoming a bit more sceptical that the Fed can deliver the
aggressive cuts of over 160 basis points," said Kieran Williams, head of
Asia FX at InTouch Capital Markets.
Markets are pricing in a 65% chance of a rate cut by the Fed
in March, according to the CME FedWatch tool, compared with the 81% likelihood
at the start of the week. They are also pricing in 158 bps of cuts this year.
Geopolitical worries have also sapped sentiment as investors
keep an eye on developments in the Red Sea, Gaza and Ukraine.
Overnight, U.S. stocks ended lower after mixed earnings from
Morgan Stanley and Goldman Sachs pressured banks, and as sell-offs in Boeing
and Apple weighed on the S&P 500. [.N]
In currency markets, the dollar index, which measures the
U.S. currency against six rivals, rose 0.029% and was hovering near the
one-month high of 103.42 it touched on Tuesday.
The Japanese yen weakened 0.09% to 147.34 per dollar, while
Sterling was last at $1.2634. [FRX/]
U.S. crude fell 0.68% to $71.91 per barrel and Brent was at
$77.84, down 0.57% on the day. [O/R]
Gold prices were little changed at $2,028 in Asian hours
after dropping 1% in the previous session on the stronger dollar.