Il Nuovo Postiglione - Asian markets fall on China growth concerns

A strong rally on Wall Street, where the Dow closed 2.0 percent higher, did not carry over to Asia, and Beijing's announcement of a fresh raft of measures to stimulate the economy did little to calm nerves.

The package announced on Monday includes more than 140 billion yuan ($21 billion) in additional tax rebates, bringing the total amount of tax relief this year to 2.64 trillion yuan, Xinhua news agency reported following a meeting of the State Council chaired by Premier Li Keqiang.

China's economy has taken a hit from Beijing's zero-Covid approach to the pandemic, which has resulted in lengthy lockdowns of major cities and mass testing of millions of people.

Prolonged virus lockdowns have constricted supply chains, dampened demand and stalled manufacturing.

Investment banks UBS Group and JPMorgan Chase cut their China economic growth forecasts due to the impact of the coronavirus strategy.

UBS on Tuesday cut its 2022 GDP growth forecast to 3.0 percent from 4.2 percent while JPMorgan on Monday trimmed its forecast to 3.7 percent from 4.3 percent, Bloomberg News reported.

"The lingering restrictions and lack of clarity on an exit strategy from the current Covid policy will likely dampen corporate and consumer confidence and hinder the release of pent-up demand," UBS economists including Tao Wang wrote in a research note, according to Bloomberg.

China has targeted full-year growth of around 5.5 percent, but data published in April showed that first-quarter growth slowed to 4.8 percent after its economy lost steam in the latter half of last year.

Concerns over the economic fallout from China's dogged pursuit of a zero-Covid approach and its knock-on impact on supply chains and the wider global economy spooked investors, with Asian markets well into the red on Tuesday.

Tokyo was off 0.5 percent while Hong Kong was down 1.5 percent after the city's leader Carrie Lam said there would likely be no relaxation of quarantine travel restrictions for the remainder of her term, which ends on June 30.

Shanghai and Seoul were both down 0.8 percent, while Taiwan, Bangkok, Sydney and Manila also retreated. Singapore was one of the few markets to post gains.

Later in the week, investors will be eyeing the minutes from the latest Federal Reserve rate-setting meeting for clues about further rate hikes aimed at reining in inflation. A raft of economic figures will also provide insights into the state of the US economy.

"If inflation remains sticky and the Fed needs to be more aggressive, assets are not cheap enough yet -– in that world, more recession risk will need to be priced through lower earnings," said Stephen Innes of SPI Asset Management.

"However, if inflation does cool down, there are many compelling opportunities, significantly if 'storm clouds' over the economy dissolve."

Oil was lower, with both contracts down 0.4 percent.

"Energy traders see choppy waters ahead for oil prices as uncertainty persists with the global economic outlook and over the EU's progress with a ban on Russian oil," said Edward Moya of OANDA

- Key figures at around 0330 GMT -

Tokyo - Nikkei 225: DOWN 0.5 percent at 26,863.33 (break)

Hong Kong - Hang Seng Index: DOWN 1.5 percent at 20,172.28

Shanghai - Composite: DOWN 1.1 percent at 3,112.37

Dollar/yen: DOWN at 127.73 yen from 127.90 yen at 2030 GMT Monday

Euro/dollar: UP at $1.0670 from $1.0692

Pound/dollar: DOWN at $1.2564 from $1.2587

Euro/pound: UP at 84.93 pence from 84.92 pence

Brent North Sea crude: DOWN 0.4 percent at $112.94 per barrel

West Texas Intermediate: DOWN 0.4 at $109.81 per barrel

New York - Dow: UP 2.0 percent at 31,880.24 (close)

London - FTSE 100: UP 1.7 percent at 7,513.44 (close)

A.Riccobono--INP