Asian stocks pulled back on Tuesday ahead of a highly anticipated testimony from Federal Reserve Chair Jerome Powell and a rate cut in China aimed at boosting the country's economy. The Shanghai Composite fell by 0.3% the Nikkei declined by 0.7% and South Korea's Kospi dropped by 0.4%. Meanwhile S&P 500 futures traded flat with investors keeping a close eye on Powell's testimony scheduled for later in the day.
Powell is expected to address the recent surge in inflation rates which could lead to a rise in interest rates. This has caused uncertainty among investors with many concerned about the potential impact on stock prices and the economy as a whole.
China's central bank the People's Bank of China is set to announce its latest benchmark lending rate on Tuesday. The rate cut is expected to be modest with some analysts predicting a reduction of around 5 basis points. This move is part of China's ongoing efforts to support its economy which has been hit hard by the ongoing trade war with the US and the COVID-19 pandemic.
In other news shares of Chinese tech giant Tencent fell by 2.7% on Tuesday after the company was fined by regulators for failing to report past acquisitions and investments for antitrust reviews. The company has been given 30 days to rectify the situation and its shares are expected to remain volatile in the short term.
