SYDNEY, May 24 — Asian shares slid today as relief at a rally on Wall Street was punctured by a retreat in US stock futures, while the euro held near one-month highs as odds narrowed on a July rate rise from the ECB.

After ending yesterday firmer, Nasdaq futures lost 1.5 per cent, with traders blaming an earnings warning from Snap which saw shares in the Snapchat owner tumble 28 per cent. S&P 500 futures slipped 0.9 per cent, surrendering some of yesterday’s 1.8 per cent bounce. EUROSTOXX 50 futures fell 0.5 per cent and FTSE futures 0.6 per cent.

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.8 per cent in hesitant trading. Japan’s Nikkei fell 0.8 per cent and Chinese blue chips 1.1 per cent.

Markets had taken some comfort from US President Joe Biden’s comment yesterday that he was considering easing tariffs on China, and from Beijing’s ongoing promises of stimulus. Unfortunately, China’s zero-Covid policy, with attendant lockdowns, has already done considerable economic damage.

"Following disappointing April activity data, we have downgraded our China GDP (gross domestic product) forecast again and now look for 2Q GDP to contract 5.4 per cent annualised, previously ‒1.5 per cent,” warned analysts at JPMorgan.

"Our 2Q global growth forecast stands at just 0.6 per cent annualised rate, easily the weakest quarter since the global financial crisis outside of 2020.” Early surveys of European and US manufacturing purchasing managers for May due today could show some slowing in what has been a resilient sector of the global economy.

Japan’s manufacturing activity grew at the slowest pace in three months in May amid supply bottlenecks, while Toyota 7203.T announced a cut in its output plans. Analysts have also been trimming growth forecasts for the United States given the Federal Reserve seems certain to hike interest rates by a full percentage point over the next two months.

The hawkish message is likely to be driven home this week by a host of Fed speakers and minutes of the last policy meeting due tomorrow. The European Central Bank is also turning more hawkish, with President Christine Lagarde surprising many by opening the door for a rate rise as early as July. That saw the euro at US$1.0665 (RM7.31), having bounced 1.2 per cent overnight in its best session since early March. It now faces stiff chart resistance around US$1.0756.

The dollar also retreated versus sterling and a range of currencies, taking the dollar index down 0.9 per cent overnight. It was last up a fraction at 102.240.

Meanwhile the euro had jumped sharply to 136.05 Japanese yen, while the dollar faded a little to ¥127.65.

The pullback in the dollar helped gold regain some ground to US$1,855 an ounce.

Oil prices were caught between worries over a possible global downturn and the prospect of higher fuel demand from the US summer driving season and Shanghai’s plans to reopen after a two-month coronavirus lockdown.

US crude eased 66 cents to US$109.63 per barrel, while Brent LCOc1 lost 70 cents to US$112.74. — Reuters