Asian stocks declined as better-than-expected China data failed to dispel concerns over the country’s economic outlook, while intensifying Middle East tensions kept sentiment in check.
(Bloomberg) — Asian stocks declined as better-than-expected China data failed to dispel concerns over the country’s economic outlook, while intensifying Middle East tensions kept sentiment in check.
Hong Kong’s equity indexes erased a brief rally spurred by a slew of economic data beats, pointing to still-fragile sentiment. China’s economic growth and retail sales suggested the economy is finding a foothold, while the property market remained a drag. Onshore Chinese benchmarks and US futures remained in the red. Stocks in Australia and South Korea fluctuated.
The onshore and offshore yuan strengthened, while crude oil and copper extended gains. An index of China’s property developers headed for its lowest since 2009, as stress in the sector continues to rise amid slumping home sales and deepening debt woes for major developers.
“I don’t think market will be confident on growth just from one round of improved macro data,” said Xin-Yao Ng, an investment director for Asian equities at abrdn. “Investors will still be watching for company results and stimulus from the government to drive confidence.”
The Bank of Japan announced unscheduled bond purchases after Japan’s 10-year yield touched a fresh decade-high. Japan’s sovereign debt has faced renewed selling pressure amid speculation that the central bank will tweak is ultra-easy monetary policy sooner rather than later. The BOJ is likely to discuss raising its inflation projection at its policy meeting later this month, according to people familiar with the matter.
Treasuries steadied in Asian trading after two-year yields hit the highest since 2006 in the previous session as strong US data reinforced the higher-for-longer rates narrative. Swap contracts tied to Fed rate decisions showed traders are pricing in more than 60% odds that policymakers will raise interest rates by a quarter percentage point in January.
US retail sales exceeded all forecasts and industrial production strengthened last month, fresh evidence of a resilient American consumer whose spending is helping stabilize manufacturing. The reports prompted a slew of economists, from Goldman Sachs to JPMorgan Chase & Co. and Morgan Stanley, to boost their tracking estimates for third-quarter gross domestic product.
“There is a lot going on in the bond markets and the global geopolitics around the whole world,” Nancy Davis, founder and chief investment officer at Quadratic Capital Management, said on Bloomberg Television. “It’s hard to keep up with everything, but there is a lot of movement. The daily volatility that we’re seeing in the Treasury market is extreme.”
Oil extended gains to advance 2.1%, and gold edged up following the explosion at a Gaza hospital that left hundreds dead. President Joe Biden suspended a visit to Jordan after the country canceled plans for a summit with Egyptian and Palestinian leaders.
Israel blamed a failed missile from militant group Palestinian Islamic Jihad for the blast, potentially the deadliest since the killing of 1,300 Israelis in the Oct. 7 attack by Hamas, which is designated a terrorist organization by the US and European Union. The Pentagon said it didn’t have information on who was responsible and the US called for an investigation.
Key events this week:
- UK CPI, Wednesday
- Eurozone CPI, Wednesday
- Morgan Stanley, Netflix, Tesla earnings, Wednesday
- Federal Reserve issues Beige Book economic survey, Wednesday
- Philadelphia Fed President Patrick Harker and New York Fed President John Williams speak at separate events, Wednesday
- Australia unemployment, Thursday
- Japan trade, Thursday
- China property prices, Thursday
- US initial jobless claims, existing home sales, leading index, Thursday
- Federal Reserve Chair Jerome Powell, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan speak at different events, Thursday
- Japan CPI, Friday
- China loan prime rates, Friday
- Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
- S&P 500 futures fell 0.2% as of 12:48 p.m. Tokyo time. The S&P 500 was little changed.
- Nasdaq 100 futures fell 0.2%. The Nasdaq 100 fell 0.3%
- Hong Kong’s Hang Seng was little changed
- China’s Shanghai Composite fell 0.6%
- Japan’s Topix fell 0.3%
- Australia’s S&P/ASX 200 was little changed
- Euro Stoxx 50 futures was little changed
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0574
- The Japanese yen was little changed at 149.67 per dollar
- The offshore yuan rose 0.2% to 7.3105 per dollar
- The Australian dollar rose 0.1% to $0.6374
- Bitcoin rose 0.1% to $28,502.06
- Ether rose 0.4% to $1,566.6
- The yield on 10-year Treasuries was little changed at 4.83%
- Australia’s 10-year yield advanced 10 basis points to 4.65%
- West Texas Intermediate crude rose 2.1% to $88.45 a barrel
- Spot gold rose 0.7% to $1,936.83 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Tassia Sipahutar, Ran Li, John Cheng and Charlotte Yang.
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