Asian stocks sink as post

-- Asian stocks retreated on Futures buy and sell signal prompt softwareTuesday after four straight days of gains as investors awaited more economic cues from China and Australia, while South Korean shares saw a heavy dose of profit taking. 

South Korea’s sank 2.6%, leading losses in the region as investors locked in profits from an over 4% jump in the prior session. The KOSPI marked its best day in over three years after the South Korean government banned short-selling until end-June 2024.

But given that the underlying fundamentals for South Korean markets- specifically slowing economic growth and weakening demand in China- remained the same, the KOSPI quickly reversed most gains. 

Broader Asian markets were also hit with a measure of profit taking, as markets somewhat reconsidered expectations that the Federal Reserve will pause its current rate hike cycle. 

Overnight comments from Fed officials struck a hawkish note, particularly as Minneapolis Fed President Neel Kashkari warned that the central bank may not be done raising rates.

Expectations of a pause in the Fed’s rate hikes, especially after weaker-than-expected payrolls data, had spurred strong gains in global stock markets over the past four sessions.

But Treasury yields rebounded on Monday following Kashkari's comments, giving Wall Street indexes a muted session and providing a weak lead-in to Asian markets. 

Japan’s index fell 0.9% on Tuesday after rallying around 6% over the past four sessions, while futures for India’s index pointed to a weak open. 

Chinese trade data in focus, stocks fall

Chinese markets fell before key trade data from the country, due later in the day. China’s and indexes fell 0.7% and 0.5%, respectively, while losses in heavyweight technology stocks saw the lose 1.2%. 

Chinese and are expected to see a sustained, albeit smaller decline in October, while the country’s is expected to improve. The readings are expected to provide more cues on an economic recovery in the country, especially with regards to overseas demand for Chinese goods.

But weakness in imports could also signal more headwinds for broader Asian markets, given that they depend on China as a major export destination. 

Most Southeast Asian markets sank on this notion, with the and the down 0.3% each. were flat after data showed grew less than expected in October. 

Chinese is also due later this week. 

Australian stocks dip before RBA rate decision 

Australia’s index fell 0.3%, with sentiment towards local stocks hit by anticipation of a Reserve Bank of Australia (RBA) meeting.

The RBA is widely expected to (bps) to 4.35%, further tightening monetary conditions for local stocks. The move comes following an uptick in Australian inflation over the past quarter. 

Higher rates have weighed heavily on the ASX 200 this year, as the Australian economy cooled. But bank stocks benefited from the increased returns on lending, while consumer spending also remained strong despite high inflation and interest rates. 

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