© Reuters.
Investing.com – Most Asian stocks moved in a flat-to-low range on Monday, with Chinese markets dropping the most as investors waited for more interest rate cuts in the country, while the focus also remained on more signals from the US Federal Reserve.
Federal Reserve Chairman Jerome Powell is due on Wednesday and will likely provide more signals about monetary policy after the central bank paused its rate-raising cycle, but announced at least two rate hikes later in the year.
Chinese stocks fall as growth fears mount ahead of a key lending rate cut
Chinese indices fell 0.8% and 0.5%, respectively, while Hong Kong lost 0.9% as they both pulled back from strong gains made last week.
The People’s Bank of China is widely expected to trim its benchmark on Tuesday, after the bank cut interest rates on medium and short-term lending last week.
While the move led to a strong rally in Chinese markets over the past week, they have still been trading relatively lower for the year so far as concerns persist about slowing growth in the country.
Goldman Sachs (NYSE: ) cut its forecast for economic growth for China this week, joining a slew of other investment banks amid lowering bets on the country’s economic recovery this year.
Economic readings for April and May showed that China’s recovery was running out of steam, despite the lifting of anti-COVID measures earlier this year.
Markets also received a small boost from high-level talks between US and Chinese ministers, with both sides reporting little progress toward defusing simmering tensions between the world’s largest economies.
Losses in China extended to other markets, with South Korea down 0.8%, while losses were led across Southeast Asia, down 1%.
Japan fell 0.1%, while the broader index added 0.1%, pausing after surging to 33-year highs last week.
Australia was among the few outperformers on the day, rising 0.7% on strength from banking and financial heavyweights.
Powell Testimony, Federal Speakers on Tap
Broader Asian markets held a steady to subdued range, ahead of Federal Reserve Chair Jerome Powell’s testimony before Congress on Wednesday.
Investors have been on the alert for any signs of a more hawkish monetary policy, especially after the Federal Reserve raised interest rates higher this year.
Rising interest rates bode badly for Asian markets, as it curbs foreign capital flows into the region and also reduces the attractiveness of risk-driven assets.
Aside from Powell, several Fed officials are also scheduled to speak this week.