Asian stocks fell on concern policy decisions from major central banks this week will stay hawkish as inflation remains a threat. The rally in oil gathered pace, with Brent touching $95 per barrel.
(Bloomberg) — Asian stocks fell on concern policy decisions from major central banks this week will stay hawkish as inflation remains a threat. The rally in oil gathered pace, with Brent touching $95 per barrel.
Shares in mainland China slipped on speculation the nation’s economic recovery is faltering. Equities also dropped in Japan and Australia, although the latter pared losses after central bank minutes showed a higher hurdle for further tightening. The Federal Reserve sets policy Wednesday, the Bank of England Thursday and the Bank of Japan Friday.
Energy shares gained as both Brent and West Texas Intermediate climbed for a fourth day on the back of tightness in the physical market. Brent surpassed $95 per barrel for the first time since November.
“We’re all on ‘central bank watch’ right now,” said David Chao, global market strategist for Asia Pacific ex-Japan at Invesco Ltd., as investors and policy makers factor in elevated oil prices, sticky consumer-price data from the US last week and more. “Also Chinese data – despite beating consensus expectations on many measures – still showed the property market trying to find a bottom. All these variables have been weighing on market sentiment as we head into the FOMC decision,” he said.
US and Hong Kong stock futures were little changed after the S&P 500 and Nasdaq 100 indexes both inched higher on Monday.
Positive news from developers Country Garden Holdings Co. and Sunac China Holdings Ltd. failed to lift sentiment. Country Garden won bondholder approval on the last of a batch of eight local notes it sought to extend repayments, while Sunac secured creditors’ approval on its debt restructuring scheme.
BlackRock Investment Institute cut its rating for emerging-market equities to neutral from overweight, saying China’s struggling property sector remains a drag on growth, while policy stimulus isn’t as large as in the past, strategists including Jean Boivin and Wei Li wrote in a research note.
The dollar edged higher against most of its major peers, while Treasuries were little changed. The yuan weakened against the greenback.
With the Fed forecast to keep interest rates on hold this week, traders will be focused on the so-called dot plot summary of economic forecasts. The two main questions are whether policymakers will retain their projections for one more 25 basis-point hike by year-end, and how much easing they are penciling in for 2024. In June, they projected one percentage point of cuts.
“That’s probably too much, given where growth and inflation is for the US,” Joey Chew, head of Asia foreign-exchange research at HSBC Holdings Plc, said about next year’s possible cuts on Bloomberg Television. Investors should expect the dollar to get a boost if the dot plots show less rate cuts projected for next year, she said.
Key events this week:
- This week, Ukrainian President Volodymyr Zelenskiy is expected to meet with Joe Biden at the White House, attend United Nations General Assembly in New York
- OECD releases interim economic outlook report on the global economy, Tuesday
- Eurozone CPI, Tuesday
- Bloomberg Future of Finance Conference in Frankfurt, with speakers to include German Finance Minister Christian Lindner, Tuesday
- US housing starts, Tuesday
- Japan trade, Wednesday
- China loan prime rates, Wednesday
- UK CPI, Wednesday
- Federal Reserve policy meeting followed by Fed Chair Jerome Powell’s news conference, Wednesday
- Bank of Canada issues summary of September’s policy meeting, Wednesday
- Eurozone consumer confidence, Thursday
- Bank of England policy meeting, Thursday
- US leading index, initial jobless claims, existing home sales, Thursday
- China’s Bund Summit, Friday
- Japan CPI, PMIs, Friday
- Bank of Japan rate decision, Friday
- Eurozone S&P Global Eurozone PMIs, Friday
- US S&P Global Manufacturing PMI, Friday
Some of the main moves in markets:
Stocks
- S&P futures were little changed as of 12:58 p.m. Tokyo time. The S&P 500 closed little changed
- Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.2%
- Japan’s Topix fell 0.3%
- Australia’s S&P/ASX 200 fell 0.4%
- Hong Kong’s Hang Seng was little changed
- The Shanghai Composite was little changed
- Euro Stoxx 50 futures rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0683
- The Japanese yen fell 0.1% to 147.76 per dollar
- The offshore yuan fell 0.1% to 7.2997 per dollar
- The Australian dollar was little changed at $0.6436
Cryptocurrencies
- Bitcoin rose 0.2% to $26,830.23
- Ether fell 0.2% to $1,635.01
Bonds
- The yield on 10-year Treasuries was little changed at 4.31%
- Japan’s 10-year yield advanced one basis point to 0.710%
- Australia’s 10-year yield declined four basis points to 4.17%
Commodities
- West Texas Intermediate crude rose 1.1% to $92.48 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott, John Cheng and Joanna Ossinger.
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