Asia stocks hold up, China gives up some gains after weak trade data

Most Asia-Pacific stocks markets strengthened on Wednesday on rising expectations that China will step in to stimulate its economy and as overnight gains on Wall Street helped brighten the mood.

European markets looked set to follow cautiously, with the pan-region Euro Stoxx 50 futures FESX1! edging up by 0.23%. German DAX futures DAX1! added 0.2%, while the FTSE futures Z1! were almost flat. U.S. stock futures, the S&P 500 e-minis ES1!, was up by 0.1%.

MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) gained 0.6% by the late morning.

China's equity indexes gave up some gains after poor trade data in May. The benchmark equity index 000001 was almost flat, while Hong Kong's Hang Seng HSI added 0.9%.

Chinese manufacturers struggled to find demand abroad and domestic consumption remained sluggish, raising expectations of help for the economy. Exports shrank much faster than expected in May and imports fell, albeit at a slower pace.

"Domestic demand is subdued, but external demand was even weaker ... so that supports the case for more resolute monetary policy stimulus measures by the PBOC (People's Bank of China) to prop up domestic demand," said Carlos Casanova, senior Asia economist at UBP.

On Tuesday, China reportedly asked the biggest banks to cut deposit rates to boost the economy. Speculation of policy support for the troubled property sector has been lifting those shares over the past week.

Japan was an outlier, as investors turned cautious about a rally, while there were sell-offs ahead of the fixing of special quotation prices at the end of the week. The Nikkei NI225 slid 1.1% after touching a 33-year high on Tuesday.

"Overall, across the board, assets are doing pretty well," said Yuting Shao, macro strategist at State Street Global Markets. "The U.S. debt ceiling uncertainty (has been) removed (and) hope on China to introduce more help to the economy is also a good sign for the market."

The U.S. S&P 500 SPX ended higher on Tuesday, gaining support from strengthening bets that the Federal Reserve will hold interest rates steady at its policy meeting next week.

The two-year Treasury yield (US2YT=RR), which typically moves in step with interest rate expectations, fell slightly to about 4.5% in Tokyo, from Tuesday's close at 4.516%. The yield on 10-year notes US10Y slipped to around 3.67%.

The U.S. dollar index DXY was almost flat at 104.09.

The Australian dollar AUDUSD reached its highest since mid-May at $0.6690, extending a rally following a central bank rate increase on Tuesday.

Oil extended losses on Wednesday as concern over global economic headwinds deepened, erasing gains booked after top crude exporter Saudi Arabia's surprise weekend pledge to deepen output cuts.

Brent crude futures BRN1! were down 40 cents, or 0.5%, at $75.89 a barrel at 0456 GMT. The U.S. West Texas Intermediate crude futures CL1! fell 35 cents, also 0.5%, to $71.39 a barrel.

Gold GOLD was slightly higher, trading at $1,963.5 per ounce.

Leading cryptocurrency bitcoin BTCUSD was trading at about $27,000, consolidating after a sharp overnight rebound from as low as $25,350.

The token has been a paradoxical beneficiary of a U.S. Securities and Exchange Commission (SEC) crackdown on cryptocurrency exchanges, and the classification of tokens including Solana, Cardano and Polygon as securities.

"The SEC is making life nearly impossible for several altcoins," said Oanda senior market analyst Ed Moya. "And that is actually driving some crypto traders back into Bitcoin."