Asian stocks are set to edge lower, despite gains on Wall Street, as China’s sluggish economic recovery triggered growth forecast cuts and a warning from US Treasury Secretary Janet Yellen that it could cause ripple effects across the global economy.

Hong Kong and Australian futures pointed to modest losses on Tuesday, while Japanese shares will reopen after a public holiday. In the US, optimism is mounting that the Federal Reserve is nearing the end of its monetary-tightening cycle as the inflation threat wanes. The dollar was little changed against major peers in early Asia trading on Tuesday.

The S&P 500 gained 0.4% and the tech-heavy Nasdaq 100 rose almost 1% on Monday, with Activision Blizzard Inc. advancing after Microsoft Corp. and British regulators held “productive” talks needed to clear the companies’ $69 billion tie-up.

While risk sentiment got a boost in the US, concern is growing in Asia after China’s disappointing economic figures released Monday prompted economists at several major banks to downgrade outlooks. JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. cut their growth projections for this year to 5%, putting Beijing’s official gross domestic product target of around 5% at risk.

In the hours after the data release, which helped push stocks in Shanghai lower on Monday, calls mounted from investors for Beijing to inject real stimulus into its flagging economy. Yellen said in a Bloomberg TV interview that “many countries do depend on strong Chinese growth to promote growth in their own economies, particularly countries in Asia, and slow growth in China can have some negative spillovers for the United States.”

Still, Yellen said that while US growth has slowed, the labor market looked quite strong and she didn’t expect a recession to hit the world’s biggest economy. The nation is on a “good path” to bringing down inflation without a major weakening in the labor market, she said.

In the US, the next pressure point for markets will be earnings, with hundreds of companies reporting over the next few weeks. S&P 500 firms are expected to post a 9% drop in profits in the second quarter, making it the worst season since 2020, according to data compiled by Bloomberg Intelligence. In Europe, it may be even worse, with a projected 12% slump.

“Running bulls could be tripped up by cracks in the economy and corporate earnings,” said Saira Malik, chief investment office of Nuveen. “Looking at S&P 500 corporate earnings as a gauge, analyst estimates continue to be revised lower for both the second quarter of 2023 and the full year.”

In commodities, crude futures dropped as traders weighed disappointing Chinese data and restarting Libyan supplies against signs of a tightening market. Wheat futures jumped after Russia terminated a grain-export deal, jeopardizing a key trade route from Ukraine. And gold was little changed.

Key events this week:

• US retail sales, industrial production, business inventories, cross-border investment, Tuesday
• Eurozone, UK CPI, Wednesday
• US housing starts, Wednesday
• China loan prime rates, Thursday
• US initial jobless claims, existing home sales, Conf. Board leading index, Thursday
• Japan CPI, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 8:02 a.m. Tokyo time. The S&P 500 rose 0.4%
• Nasdaq 100 futures fell 0.1%. The Nasdaq 100 rose 0.9%
• Hang Seng futures fell 0.7%
• S&P/ASX 200 futures fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.1239
• The yen was little changed at 138.74 per dollar
• The offshore yuan was little changed at 7.1800 per dollar

Cryptocurrencies

• Bitcoin rose 0.6% to $30,101.78
• Ether rose 1% to $1,909.88

Bonds

• The yield on 10-year Treasuries declined three basis points to 3.81%
• Australia’s 10-year yield declined one basis point to 3.98%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.Currencies