Asia markets cautious over China growth news

Asian stocks were digesting growth concerns in China and rising interest rates in the United States on Tuesday with Hong Kong dropping sharply while Japan edged higher on the back of a plummeting yen.

Chinese growth numbers for the first quarter of 2022 exceeded expectations on Monday but came with a government warning of  "significant challenges" ahead, with key economic hubs in the throes of Covid-19 lockdowns.

Millions of residents are still cloistered in their homes in financial capital Shanghai with restrictions -- which have also hit tech hub Shenzhen and the northeastern grain basket of Jilin -- shutting supply lines.

Investors were left weighing whether attempts to lift the economy by Chinese policymakers -- who have held off cutting interest rates -- would offset Beijing's zero-Covid policies.

"The focus in Asia is on mainland policy easing to cushion the impact of lockdowns," Stephen Innes at SPI Asset Management said, adding that while first-quarter growth was marginally better than predicted,  "there was no positive follow-through in China-sensitive assets".

"Reopening cities is the only fix to drive credit growth, which could translate into a sustainable economic rebound that supports equity markets and a load of other China proxy assets," he said.

Japan's Nikkei 225 made gains, and led most Asian markets slightly upward with South Korea, Taiwan, India, and Australia all rising.

But Hong Kong plummeted by its largest margin in three weeks after a four-day holiday hiatus over concerns around Beijing's tough tech-sector regulations and overall growth in China.