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Asian Stocks Decline Amidst China’s Economic Outlook and Rate Concerns Before Powell’s Testimony

On Wednesday, several Asian stocks experienced declines, influenced by a lackluster economic outlook from China and apprehensions about U.S. interest rates. The profit-taking trend, notably in Japan and Australia, contributed to the overall negative sentiment. The AI-driven rally in technology shares appeared to lose steam, mirroring similar trends in Wall Street indexes during overnight trading.

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In anticipation of further signals on U.S. rates, focus turned to Federal Reserve Chair Jerome Powell’s two-day testimony. Powell is expected to maintain a hawkish stance, signaling stability in interest rates in the near term.

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Chinese stocks, particularly the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes, fell by 0.4% and 0.2%, respectively. The weak sentiment persisted after China’s announcement of a 5% gross domestic product target for 2024, mirroring the previous year’s target. The 2024 National People’s Congress failed to provide clear indications of additional support for China’s post-COVID economic recovery.

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Despite a 2.5% decline in the previous session, Hong Kong’s Hang Seng index showed a mild recovery of 1% on Wednesday.

Across the region, Japan’s Nikkei 225 retreated from last week’s record highs, while Australia’s ASX 200 experienced a 0.1% decline. The Australian GDP data for the fourth quarter showed continued expansion, but the growth rate is expected to face challenges in the upcoming quarters.

South Korea’s KOSPI declined by 0.5%, driven by profit-taking in technology stocks following a strong month of gains. Additionally, higher-than-expected consumer inflation data weighed on South Korean markets.

Futures for India’s Nifty 50 index hinted at a subdued opening, although the index and the BSE Sensex 30 remained close to recent record highs. Overall, concerns about China’s economic outlook and caution ahead of Powell’s testimony contributed to the mixed performance across Asian markets.

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