Asian stocks react to weak China data after US market surge

Asian stock markets showed mixed results following disappointing economic data from China, which indicated a slowdown in factory output, retail sales, and investment for August. Hong Kong's Hang Seng index fell by 0.3%, reflecting concerns over China's economic trajectory. In contrast, Australia's S&P/ASX 200 rose by 0.4%, indicating some regional resilience. Investors are now focused on the upcoming Federal Reserve policy meeting, where a significant interest rate cut is anticipated, marking the first reduction since 2020. The Federal Reserve has maintained high interest rates to combat inflation, which has eased recently, allowing the central bank to shift its focus towards supporting the slowing job market. However, the decision on how much to cut rates remains complex, as lowering rates could potentially reignite inflationary pressures. Market participants are closely monitoring inflation indicators, which have shown some upward pressure, leading to cautious expectations regarding the Fed's actions. In currency markets, the Japanese yen appreciated against the U.S. dollar, while the euro saw a slight increase. Meanwhile, U.S. futures and oil prices experienced gains, supported by a rebound in major technology stocks like Microsoft and Broadcom, which helped recover losses from the previous week. The bond market also provided support, with Treasury yields easing ahead of the Fed's meeting. Overall, the mixed performance of Asian stocks reflects a combination of local economic concerns and global market dynamics, as investors await critical decisions from central banks that could shape the economic landscape in the coming months.