Russia, rates, and China worries shake Asian stocks. Asian equities swung on Tuesday as investors awaited interest rate hints and worried about China’s fragile economic recovery and Russia’s post-mutiny events.

MSCI’s Asia Pacific ex-Japan index (.MIAPJ0000PUS) rose 0.08% at 0126 GMT after falling 0.06% an hour earlier. The Nikkei average (.N225) lost 1%.

“Asian equities are set for a downturn on Tuesday, prompted by Wall Street’s risk-aversion behavior,” said ActivTrades global macro analyst Anderson Alves.

On Monday, mega-cap momentum stocks dragged the tech-heavy Nasdaq lower.

The Dow Jones Industrial Average (.DJI) dipped 0.04%, the S&P 500 dropped 0.45%, and the Nasdaq Composite sank 1.16%.

“It’s significant to mention that a sense of caution prevails among investors with respect to the global economy’s trajectory over the forthcoming months,” Alves added. “The threat of a potential recession during a high-interest rate cycle, enforced by central banks, could significantly impact both the U.S. and Europe, thereby influencing global trade, financing conditions, and demand.”
After four consecutive losses, Hang Seng Index (.HSI) and China’s benchmark CSI300 Index (.CSI300) opened up 0.3% and 0.1%, respectively.

S&P Global lowered its 2023 economic growth forecast for China to 5.2% from 5.5% on Monday, highlighting the uneven epidemic recovery.

It was the first time a global credit ratings agency dropped China’s projection this year, following Goldman Sachs and other investment banks.

Saxo Markets market strategist Greater China Redmond Wong said investors are also eyeing end-of-quarter U.S. stock rebalancing flows.

“The impending rebalancing is expected to have a notable impact on market dynamics, as traders prepare for potential shifts in stock prices and overall market sentiment,” Wong added. “With the month and quarter end coinciding, the magnitude of these rebalancing flows adds an element of anticipation and uncertainty for market participants.”
After a failed Russian mutiny on the weekend, geopolitical upheaval hampered risk appetite.

“Although the situation has subsided, any subsequent insurrection against Russia remains a potential cause for concern, potentially triggering a defensive reaction in safe-haven assets,” said Alves of ActivTrades.

U.S. crude rose 0.61% to $69.79 a barrel, while Brent rose 0.53% to $74.57, erasing earlier gains. Gold rose 0.32% to $1,928.9 an ounce. Currency markets rose 0.029%.

Early Asia trade saw 3.7154% 10-year U.S. Treasury yields. Two-year rates declined seven bps to 4.671%.