• Asia-Pacific equities fade previous optimism amid mixed clues.
• Upbeat yields, German inflation and Eurogroup sanctions weigh on sentiment.
• Shanghai’s unlock plan, downbeat China data suggests more relief for traders.
• Eurozone inflation, Biden-Powell meeting will be important for immediate directions.

Asian traders fade the week-start positivity as bond-buying halts amid cautious sentiment ahead of the key data/events. Also challenging market sentiment are the Eurogroup sanctions on Russia and grim conditions in Donbas. It should, however, be noted that hopes of improvement in China’s economic conditions, backed by Shanghai’s unlock and hopes of more stimulus after witnessing the downside, seem to challenge the bears.

Amid these plays, MSCI’s index of Asia-Pacific shares ex-Japan rises 0.33% intraday but Japan’s Nikkei 225 remains directionless, recently easing, to around 27,350.

Further, Australia’s ASX 200 dropped half a percent as China’s official PMIs join downbeat Building Permits at home to weigh on stocks. However, New Zealand’s NZX 50 adds 0.30% intraday amid receding hopes of RBNZ’s heavy rate hikes moving further.

Stocks in China post around 1.0% daily gains as softer PMIs for May join gradual easing of the covid-led activity restrictions to allow the government to battle the receding growth fears. Hong Kong’s Hang Seng, South Korea’s KOSPI and Indonesia’s IDX Composite also track China to print mild gains. However, India’s BSE Sensex remains pressured ahead of the key January-March India GDP figures.

On a broader front, the US 10-year Treasury yields rise almost 10 pips from Friday’s New York session close to 2.84% whereas the S&P 500 Futures print mild gains around 4,165 at the latest.

Asia-Pacific markets are likely to track Wall Street with reservations as firmer oil prices test the bulls. That said, Eurozone inflation data, as well as a meeting between US President Joe Biden and Fed Chair Jerome Powell, become crucial to watch for immediate directions.