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Asian stocks pulled back on Tuesday as weak trade data weighed on Chinese stocks while investors awaited Federal Reserve Chair Jerome Powell’s testimony later in the day for clues on the central bank’s next move on rates.
Data on Tuesday showed China’s exports and imports both fell sharply in January-February, reflecting a slowdown in the global economy and weak domestic demand. That pushed Hong Kong’s Hang Seng Index down 0.76 percent and China’s blue chip CSI300 Index 1.2 percent lower, erasing earlier gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, although the index is up 2.9 percent so far this month.
Beyond China, investor focus remains on the U.S. interest rate outlook and what Powell may say.
“U.S. rates are still the number one driver for the Asia region as far as absolute performance is concerned,” Dan Fineman, Credit Suisse’s co-head of APAC equities strategy told Reuters.
“China with its two sessions is important but rates are going to matter more than what is happening on the ground here in Asia,” he said referring to China’s National People’s Congress underway in Beijing.
Yields on benchmark 10-year Treasury notes reached 3.9578 percent, compared with its U.S. close of 3.983 percent on Monday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 4.
