The MSCI's broadest index of Asia-Pacific shares outside
Japan (.MIAPJ0000PUS), opens new tab was up 0.4%. Still, the index is down 5%
in January, set for its worst monthly performance since August.
Futures indicate bourses in Europe are set to open higher,
with the Eurostoxx 50 futures up 0.58%, German DAX futures up 0.59% and FTSE
futures 0.19% higher.
Investor focus will be on manufacturing purchasing managers'
index (PMI) figures, which are seen as a good gauge of economic health, from
the euro zone, Germany, France and Britain later in the day ahead of a European
Central Bank (ECB) meeting on Thursday.
The ECB is widely expected to keep rates unchanged, but
traders are pricing in as much as 130 basis points of interest rate cuts this
year.
The spotlight in Asia has been squarely on Chinese equity
markets after a wretched start to the year.
A Bloomberg report on Tuesday that said Chinese authorities
were preparing a package of measures worth $278 billion to stabilise the
slumping stock market offered some hope markets may steady, though investors
remained sceptical and unimpressed.
"I suspect policymakers would prefer markets to be more
stable, but I doubt they plan to make huge unconditional injections into
markets," said Ben Bennett, APAC investment strategist for Legal and
General Investment Management.
"More they want to suggest that it’s not a one-way bet
for markets to go down. Hopefully this leads to a bit of stabilisation
now."
On Wednesday, China stocks were volatile, with the blue-chip
index (.CSI300), opens new tab 0.48% higher but hovering near the five-year
lows it has been trading at for past week. Hong Kong's Hang Seng Index (.HSI),
opens new tab surged 1.6%, but is down 8% in January.
Hong Kong stocks were also boosted by Alibaba Group
(9988.HK), opens new tab shares, which gained 6% after a report said co-founder
Jack Ma and Chairman Joe Tsai bought shares worth millions of dollars in the
Chinese e-commerce giant in the fourth quarter.
"I think markets are awaiting more follow-through on
the mooted state support for China’s equity market," said Nicholas Chia,
macro strategist at Standard Chartered.
"While a big bang stimulus package remains out of the
picture, the mood is markedly bearish that any relief package can lead to a
violent snapback in Chinese equities."
Elsewhere in Asia, Japan's Nikkei (.N225), opens new tab
closed 0.8% lower, while the yen perked up and government bond yields jumped to
their highest levels in more than a month as traders took note of the Bank of
Japan's (BOJ) hawkish tilt on Tuesday.
The Japanese yen strengthened 0.30% to 147.91 per dollar.
The BOJ on Tuesday maintained its ultra-easy monetary settings but signalled
its growing conviction that conditions for phasing out its huge stimulus were
falling into place, suggesting that an end to negative interest rates was
nearing.
"It has been our long held view that April is the
earliest that the BoJ would consider raising interest rates and ending yield
curve control," Commonwealth Bank of Australia analyst Kristina Clifton
said in a note.
The yield on 10-year U.S. Treasury notes was last at 4.120%,
while the two-year Treasury yield, which typically moves in step with interest
rate expectations, was at 4.332%.
E-mini futures for the S&P 500 rose 0.29% as investors
assess a slew of corporate earnings.
Netflix (NFLX.O), opens new tab rallied 8% in extended
trading on Tuesday after the video streaming service handily beat Wall Street
subscriber estimates in the fourth quarter, driven by a strong slate of shows.
The dollar index , which measures the U.S. currency against
six rivals, eased a touch and was last at 103.43.
The index is up 2% this month, on course for its strongest
monthly performance since September as traders walk back their expectations of
early and steep interest rate cuts from the Federal Reserve.
This week, the spotlight will switch to the U.S. personal
consumption expenditure (PCE) index data, the Federal Reserve's preferred
inflation gauge, as well as the S&P PMI readings, to assess the outlook for
interest rates.
Markets are now pricing in a 47% chance of a rate cut in
March from the Fed, according to the CME FedWatch tool, compared to the 88%
chance of a rate cut priced in a month earlier.
U.S. crude futures rose 0.12% to $74.46 per barrel and Brent futures were at $79.63, up 0.1% on the day. Reuters