Investing.com — Asian stock markets were mostly lower on Tuesday, reversing the previous day’s rally as market sentiment remained on edge ahead of interest rate decisions in the coming days by the Bank of Japan and the U.S. Federal Reserve.
China’s markets continued to lag behind their peers, with domestic indexes hitting their lowest in six months as concerns about a slowing economic recovery showed few signs of easing.
Regional markets received moderate readings from Wall Street, which ended flat on Monday as caution over central bank meetings prompted investors to refrain from making big bets.
U.S. stock index futures fell in Asian markets ahead of Wednesday’s trading, while earnings reports from major technology companies were also in focus.
Japanese stocks fall amid uncertainty over Bank of Japan
Japan’s stock index fell 0.9%, along with the broader index, due to uncertainty over the Bank of Japan’s policy interest rate.
Analysts are divided over the likelihood of the Bank of Japan raising interest rates after some positive inflation news over the past two months, but underlying inflation, a key factor in the bank’s interest rate decisions, remains well below the bank’s annual target of 2%.
Expectations for the BOJ meeting ranged from no change to a 10 or 15 basis point hike.
But apart from the rate decision, uncertainty remains about when the Bank of Japan plans to begin tapering its quantitative easing policy. The bank has said it will outline the details of its plan at its July meeting.
The end of quantitative easing will signal less support for the Japanese stock market, as the Bank of Japan plans to gradually reduce its asset purchases.
China stocks hit six-month low awaiting PMI release
China’s stock indexes fell 0.9% and 0.8%, respectively, to their lowest levels since early February, while Hong Kong’s index slid 1.2% to its lowest in three months.
Chinese stocks suffered a long selloff throughout July as lukewarm signals from the Chinese government about stimulus measures fueled concerns about a slowing economic recovery.
Traders are refraining from investing in the Chinese market due to uncertainty over the outcome of the US presidential elections on US-China trade relations.
The focus this week is on a series of indicators that are expected to provide further clues about China, Asia’s largest economy.
Broader Asian markets fell, with technology stocks also falling ahead of earnings reports from Microsoft Corp (NASDAQ:), Apple Inc (NASDAQ:), Meta Platforms Inc (NASDAQ:) and Amazon.com Inc (NASDAQ:) later this week.
South Korean stocks fell 1%, while shares in Taipei, home to the world’s largest contract chipmaker TSMC (TW:), fell 1.5%.
Australia fell 0.8%, retreating ahead of the release of its second quarter figures. The quarterly monthly CPI reading is poised for a stronger release on Wednesday, giving the RBA more impetus to keep interest rates high or even raise them further.
Indian stock index futures hinted at a negative opening after struggling to breach the 25,000-point mark in recent trade and recording wild fluctuations.
