Asian stocks in limbo as china’s  party congress looms

Asian stocks were lower, led by lower Chinese shares and higher US yields.

Pan-regional Euro Stoxx 50 futures remained largely unchanged as caution was imposed before February’s European inflation results were released.

Median forecasts are 8.3%, but risks increase after France, Spain, and Germany.

Asia-Pacific shares outside of Japan, as measured by the MSCI index, dropped by 0.5%, reversing some of the 2.2% gain in the preceding session, the highest increase in two months. Meanwhile, Japan’s Nikkei stayed largely unchanged.

Hong Kong’s Hang Seng index retreated 0.9% after posting its biggest daily gain in three months on Wednesday when it jumped 4.3% amid unexpectedly strong readings from China’s PMI surveys.

Since Beijing ended its stringent COVID-19 regulations in December, there has been a decrease in investor enthusiasm in regard to China’s economic revitalization, as analysts are seeking out more proof to estimate the rate of economic revival.

A meeting of China’s National Party Congress could offer more hints of stimulus when it begins this weekend to set economic targets and elect new top economic officials.

Tesla shares plunge as investors anticipate fed rate increase

S&P 500 futures dipped 0.6%, and Nasdaq futures fell 0.7%, led by a 5.6% drop in Tesla shares. The company will cut vehicle assembly costs in half for next-generation cars, but the CEO did not reveal the long-hyped, small, affordable electric car.

Both bonds and stocks rallied overnight as inflation figures from Germany and the United States raised expectations that interest rates would increase and stay there longer.

German 2-year government bond yields have risen to very high levels since 2008.

In the US, manufacturing activity fell for the fourth consecutive month in February. Still, the price index for raw materials edged higher last month, raising concerns that inflation will remain stubborn.

The benchmark 10-year Treasury yield increased to a new 4-month high of 4.029%, while the two-year yield also hit a new 15-year high of 4.9312%.

Investors predict the Fed will raise rates by 25 basis points at its next meeting, but expectations for a larger 50 basis point increase have risen. The probability that the Fed’s policy rate, currently in a range of 4.6% to 4.76%, could rise above 5.4% was 53%, compared with 41.6% on February 28.