Asia stocks restrained as U.S. futures retreat

Asian shares got off to a sluggish start on Tuesday after a rally on Wall Street was soured by an early slide in U.S. stock futures, while the euro was near one-month highs as odds narrowed on a July rate rise by the ECB.

After ending Monday firmer, Nasdaq futures lost 1.3% with traders blaming an earnings warning from Snap which saw shares in the Snapchat owner tumble 28%.

S&P 500 futures also lost 0.6%, surrendering some of Monday's 1.8% bounce.

MSCI's broadest index of Asia-Pacific shares outside Japan was left almost flat as a result, while Japan's Nikkei dipped 0.1%.

Markets have taken some comfort from U.S. President Joe Biden's comment that he was considering easing sanctions 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% annualised, previously -1.5%," warned analysts at JPMorgan.

"Our 2Q global growth forecast stands at just 0.6% annualised rate, easily the weakest quarter since the global financial crisis outside of 2020."

Early surveys of European and U.S. manufacturing purchasing managers for May are due out later on Tuesday and could show some slowing in what has been a resilient sector of the global economy.

Analysts have also been trimming 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 on Wednesday.

Yet 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 up at $1.0685, having bounced 1.2% overnight in its best session since early March. It now faces stiff chart resistance around $1.0756.

The dollar also retreated versus sterling and a range of currencies, taking the dollar index down 0.9% overnight and back to 102.100.

Meanwhile the euro jumped sharply to 136.56 Japanese yen, while the dollar held steady at 127.77 yen.

The pullback in the dollar helped gold regain some ground to $1,853 an ounce. [GOL/]

Oil prices were caught between worries over a possible global downturn and the prospect of higher fuel demand from the U.S. summer driving season and Shanghai's plans to reopen after a two-month coronavirus lockdown. [O/R]

U.S. crude was down 59 cents at $109.70, while Brent lost 60 cents to $112.82.

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