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HomeLatestAsian Stocks Slide on Disappointing China NPC and Hawkish Fed Comments

Asian Stocks Slide on Disappointing China NPC and Hawkish Fed Comments

Most Asian stocks faced declines on Tuesday, led by sharp losses in Hong Kong, as the commencement of China’s week-long National People’s Congress (NPC) failed to impress investors with significant stimulus plans for the struggling economy. The disappointment, coupled with signs that the U.S. Federal Reserve is not rushing to cut interest rates, contributed to a retreat from record highs on Wall Street on Monday.


Bitcoin continued its ascent, reaching a two-year peak of $68,828, approaching its all-time high. Gold marked a record closing high of $2,114.99 on Monday.


China retained last year’s economic growth target of “around 5%” for 2022 and announced plans for a budget deficit of 3% of economic output, down from the revised 3.8% last year. It also revealed intentions to issue 1 trillion yuan ($139 billion) in special ultra-long-term treasury bonds.


While mainland stocks in China rebounded, the Hang Seng in Hong Kong deepened its losses to 2.67%. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 1%.

The early announcements from China’s NPC suggest that “large fiscal stimulus is off the table for now,” according to James Kniveton, a senior corporate FX dealer at Convera. He noted that stability remains the overriding factor in Chinese policy-making.

Japan’s Nikkei initially fell but erased early losses in the afternoon session, ending slightly down, missing a new record high close.

Hawkish comments from Atlanta Fed President Raphael Bostic, stating no urgency to cut interest rates, weighed on equities, while alternative assets like cryptocurrencies and gold gained support. Bitcoin and gold experienced notable increases despite only minor shifts in rates market pricing.

The dollar index edged up to 103.86, and the euro remained flat at $1.0852. Sterling was little changed at $1.2685, and against the yen, the dollar held steady at 150.49.

Crude oil prices continued to decline due to demand headwinds, offsetting the expected extension of voluntary output cuts by the OPEC+ producer group. Brent futures were off 17 cents at $82.63, and U.S. West Texas Intermediate (WTI) eased 25 cents to $78.49 a barrel.