China is considering setting a growth target of 5-6% for 2023 to boost investor and consumer confidence and capitalize on its post-pandemic recovery. This is a significant increase from the previous recommendation of 4.5%-5.5%. The final growth target will be announced on March 5th. The government plans to introduce more stimulus to support investment spending and mitigate the impact of property market weakness and waning global demand for exports. China's recovery so far has been led by consumption and services. Manufacturing activity also expanded at the fastest pace in over a decade in February.
US stocks closed mixed on Wednesday as the S&P 500 and Nasdaq fell for a second day due to rising Treasury yields and concerns about stubbornly high inflation. The yield on 10-year notes topped 4% for the first time since November, as did Fed funds futures, which suggested an increase in the benchmark rate to a range of 5.5%–5.75% by September. Costco earnings is in focus as other retail giants reported better-than-expected revenues.
Gold prices reached a five-day high on Wednesday due to weakness in the dollar. The greenback fell sharply against a basket of currencies on Wednesday, benefiting the yellow metal. Although a reversal in U.S. monetary policy could benefit gold in the long term, it seems unlikely in the near-term due to sticky inflation in the country.
Oil prices remained steady as traders weighed the strong economic recovery in China and awaited China’s "two sessions" meeting of top government officials for any potential policy changes. However, fears of slowing economic growth and a potential supply glut in the US limit major upside in oil prices. In addition, rising US crude inventories and concerns about further rate hikes in Europe also weighed on the market.
The US dollar stabilized in Asia on Thursday as investors awaited European inflation data, following sharp drops against the euro on Wednesday. US Treasury yields hit fresh highs during the Asia trade, boosting the dollar index by 0.39% to 104.812. Meanwhile, most Asian currencies fell as concerns grew about a more hawkish Federal Reserve and weak regional economic data. Despite China's economic recovery and strong business activity growth, the yuan lost 0.62% to the dollar.