Asia shares fall on China slowdown fears

HONG KONG, April 21 (Reuters): Fears of a sharp economic slowdown in China and higher oil prices weighed on most Asian stocks on Thursday, but a dip in US treasury yields offered some relief for broader markets worried by the prospect of aggressive rate hikes.
Chinese and Hong Kong shares hit month lows and the yuan fell to its lowest in six months as Shanghai authorities said tough Covid-19 restrictions would remain in place.
Chinese blue chips shed 1.8 per cent while Hong Kong stocks fell 2 per cent, both falling to their lowest level since mid March. The spot yuan touched 6.4478 per dollar, its softest level since October.
The declines pulled MSCI's broadest index of Asia-Pacific shares outside Japan 0.66 per cent lower, despite gains in Korea and Australia, where the local benchmark rose 0.4 per cent to not far off a record peak.
Japan's Nikkei rose 1.22 per cent.
Analysts at Nomura said they were cutting their Q2 China GDP growth forecast to 1.8 per cent year-on-year from 3.4 per cent, "owing to rapidly worsening high-frequency activity data in April, the rising number of cities under full and partial lockdowns, severe logistics disruptions, and signs that Beijing is unlikely to end its zero-Covid strategy soon."
A prolonged slowdown in China would have substantial global spillovers, IMF Managing Director Kristalina Georgieva said on Thursday, but added that Beijing has room to adjust policy to provide support.
However, U.S. and European stock futures pointed to higher opens elsewhere. EUROSTOXX 50 futures gained 0.4 per cent and FTSE futures rose 0.3 per cent, while Nasdaq futures jumped 0.8 per cent and S&P500 futures advanced 0.5 per cent.
Part of the reason for the share market gains, said analysts, was the overnight decline in the U.S. benchmark 10-year yield, even if though this might prove short lived.
It was last at 2.8766 per cent, a little higher in Asia trade, but still bruised after falling from as high as 2.981 per cent early on Wednesday.
"I think we're still heading towards 3 per cent for 10 year treasuries, I think it was a little bit of profit taking," said Rob Carnell, head of research for Asia Pacific at ING.
Lower yields sent the dollar lower overnight, particularly against the beaten down euro and sterling which managed to recover a little ground.
Moves were more muted in Asia hours. The dollar index was little changed at 100.36, down from a near two-year peak the previous day of 101.03.