By Jamie McGeever

A look at the day ahead in Asian markets from Jamie McGeever.

An interest rate decision from India and revised Japanese GDP will be the big local drivers for Asian markets on Thursday, with wider sentiment soured by a profit-taking slump in U.S. tech stocks and a surprising rate hike in Canada.

After rallying more than 25% this year, and more than 20% from the U.S. banking shock low in March, the Nasdaq had its worst day since April, sliding 1.3%.

The index of Mega Tech stocks that has driven this year's U.S. equity rally almost single-handedly - up more than 60% this year - slumped almost 3% for its biggest fall since February.

The Bank of Canada's decision to raise rates to a 22-year high of 4.75% was not widely expected. This followed an equally surprising rate hike from Australia the day before, a one-two hawkish punch from policymakers that investors had probably not braced for.

Throw in a 1% rise in oil prices, a slump in Chinese trade activity, and the yuan hitting a fresh 6-month low, and the backdrop for Asian markets in the second half of the week looks a bit darker than the first half.

The Reserve Bank of India is expected to leave its key interest rate unchanged at 6.50% and for the rest of 2023, according to a Reuters poll of economists. Although inflation hit an 18-month low of 4.70% in April, it is not seen falling to the RBI's 4% medium-term target for at least another two years.

If inflation is that sticky, investors can perhaps expect a 'hawkish pause' rather than a 'dovish pause' from the RBI, especially in light of the hawkish surprises from Australia and Canada this week.

Japanese first quarter growth, meanwhile, is expected to be revised up one tenth of a percent to 0.5% on a quarterly basis, and three tenths of a percent to 1.9% on an annualized basis, thanks to solid investment from manufacturers.

The U.S. dollar is back above 140.00 yen and a soft GDP print could push it closer to the year-to-date high just below 141.00 yen. A narrower-than-expected current account surplus in April, figures for which are also out on Thursday, could do the trick too.

The Australian dollar, which hit a one-month high on Wednesday following the RBA's rate hike, could get a nudge from Australian trade data on Thursday. The consensus forecast is for the surplus to narrow slightly from March to A$14 billion.

Here are three key developments that could provide more direction to markets on Thursday:

- India interest rate decision

- Japan GDP (Q1, revised)

- Australia trade (April)

(By Jamie McGeever)