Most Asian markets traded in a flat-to-low level as concerns about increasing US interest rates outweighed excitement over better-than-expected Chinese data.

Early Tuesday, most Asian stock markets traded at a flat-to-low level as concerns about increasing US interest rates outweighed excitement over better-than-expected Chinese economic growth.

The Shanghai Shenzhen CSI 300 and Shanghai Composite indices in China traded flat after statistics revealed that the Chinese economy grew at a faster-than-expected 4.5% in the first quarter of 2023, aided in part by the easing of anti-COVID rules earlier in the year.

However, while the reading indicated that the country's economic recovery was on the right path, other statistics indicated an uneven comeback. In March, industrial production fell short of expectations for the second month in a row, indicating that the country's large manufacturing sector is still trying to recover from COVID-era lows.

Nonetheless, robust retail sales statistics suggested that the Chinese economy's consumption-driven recovery is on the course, which is expected to boost exporters to the nation in the short term.

The rising uncertainty over whether the Federal Reserve would suspend its current rate hiking cycle weighed on general optimism. Markets are pricing in a roughly 90% possibility of a 25 basis point (bps) rise in May, with a modest chance of another 25 bps move in June, according to Fed Fund futures prices.

Rising interest rates are bad news for Asian markets because they limit the amount of foreign cash pouring into the area. Higher rates also reduce the attraction of risky investments.

Yet considering that most Asian central banks have stopped raising interest rates, Asian markets may find some support in the near future.

(investing.com, reuters.com)