China PMI mixed, Japan catches up with trade surge – Most Asian stock markets remained range-bound on Tuesday as investors digested a mixed batch of Chinese business activity data, while Japanese shares surged in catch-up trade after a long weekend.

Markets across Asia were mildly optimistic after modest gains on Wall Street overnight. But U.S. stock index futures stalled in Asian trading as expectations for the week kept investors cautious.

China stocks stall after mixed PMI

Chinese stocks and indexes edged higher on Tuesday as investors digested mixed purchasing managers' index (PMI) data for April. Official data showed that growth in April slowed slightly from March, but the pace of growth slowed sharply and exceeded expectations.

While manufacturing painted a more optimistic picture, overall PMI data showed economic activity cooling after a strong first quarter.

Nonetheless, the Chinese market's rebound has largely continued in April, with local stock indexes set to outperform regional peers this month. In April, the CSI 300 Index rose 2.5% and the Shanghai Composite Index rose 2.6%.

Hong Kong's index rose 0.6% on Tuesday, the best-performing Asian index so far in April. The Hang Seng Index rose about 7.6% in April after surging to a five-month high on bargain hunting and optimism about more stimulus measures from mainland China.

Hong Kong's gains also reflected improved confidence in China.

Asian markets excluding China to post losses in April

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Most other Asian stocks outside China are expected to fall in April as they grapple with profit-taking in the technology sector and as traders largely price in expectations of an early interest rate cut from the Federal Reserve.

Japanese stocks rose 1.3% on Tuesday, while rising 2.1% in catch-up trading after a market holiday on Monday.

But as of April, the Nikkei was Asia's worst-performing index as it suffered heavy profit-taking and uncertainty over Bank of Japan policy also weighed. The Nikkei fell nearly 5% in April and the Topix fell 0.9%.

South Korean stocks rose 0.6% on Tuesday but fell 1.5% in April as technology stocks fell.

Australian shares rose 0.2% after data showed an unexpected fall in March, which may indicate a lower inflation outlook. Weak commodity prices and concerns about China caused the ASX to fall 3.2% in April.

India index futures opened muted after rising 1% in the previous session. Continued optimism about the Indian economy has the Nifty index expected to rise 1.5% in April.

But investors are wary of the index's near-term swings as the 2024 election begins.

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