Asian stocks fell amid concern policy decisions from major central banks this week will stay hawkish amid the threat of inflation. The rally in oil gathered pace with crude approaching $95 per barrel.
(Bloomberg) — Asian stocks fell amid concern policy decisions from major central banks this week will stay hawkish amid the threat of inflation. The rally in oil gathered pace with crude approaching $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 Brent climbed for a fourth day on the back of tightness in the physical market. Chevron Corp. chief executive Mike Wirth predicted the price will return to $100 a barrel.
“Risks of a short-term spike to $100 may be rising with the current momentum but we have little conviction it would be sustainable,” said Charu Chanana, market strategist at Saxo Capital Markets Pte in Singapore. “Higher inflation could mean tighter monetary policies and OPEC+ can’t control the demand side.”
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 on 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 11:58 a.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 0.6%
- 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 $1.0686
- The Japanese yen was little changed at 147.73 per dollar
- The offshore yuan fell 0.1% to 7.2992 per dollar
- The Australian dollar was little changed at $0.6433
Cryptocurrencies
- Bitcoin rose 0.2% to $26,822.55
- Ether rose 0.1% to $1,639.5
Bonds
- The yield on 10-year Treasuries was little changed at 4.30%
- Japan’s 10-year yield advanced one basis point to 0.710%
- Australia’s 10-year yield declined six basis points to 4.15%
Commodities
- West Texas Intermediate crude rose 1.1% to $92.49 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 Yongchang Chin.
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