Hong Kong: Asian stocks fell in early trade on Thursday after a downbeat assessment of the economic recovery by the US Federal Reserve and with caution prevailing ahead of China’s second quarter GDP data.
The dollar was under pressure, holding near two month lows on a basket of currencies, while high yielding currencies such as the Australian dollar and the New Zealand dollar may be sold off if the Chinese data disappointed.
The market is also waiting for Agricultural Bank of China’s stock market debut. AgBank is expected to open higher, but its launch is seen less stellar than other huge Chinese bank offerings, as the state-run lender aims to raise a record $22 billion.
The MSCI index of stocks in Asia-Pacific outside Japan was down 0.42%.
Minutes of the Fed’s June meeting showed officials are more concerned with the pace of economic recovery. That added to jitters stoked by a weak report on June retail sales and snapped US stocks’ six-day winning streak on Wednesday, with the S&P500 ending a touch lower.
Global financial markets have already factored in slower growth in China. All 32 economists polled by Reuters predicted a moderation in China’s year-on-year growth rate in the second quarter, though the expansion rate could still be in the double digits.
However, anything near the top end of the 9.7-11% forecast range could even spark a relief rally.
The Australian dollar edged lower to $0.8820, paring gains after hitting a fresh two-month high of $0.8871 on Tuesday. The NZ dollar was down 0.3% at $0.7212 after hitting a two-month high of $0.7254.