LONDON, Nov 16 (Reuters) – World stocks fell for the first time in five sessions, oil slipped and the dollar saw a slight lift on Thursday, as markets continued to acclimatize to falling borrowing costs after nearly two years of relentless gains.
Europe’s moves saw the STOXX 600 (.STOXX) slip from a more than one-month high, Wall Street look set for an early dip, and Taiwan’s dollar rise after China’s President Xi Jinping and U.S. counterpart Joe Biden agreed to reopen key military communications channels between the two superpowers.
Xi also underscored the point by saying China would not “fight a cold war or a hot war with anyone”.
Global markets have rallied sharply this month as inflation data out of the United States and parts of Europe, such as Britain, have reinforced hopes that major central banks are now done raising borrowing costs.
Robust U.S. retail sales figures on Wednesday were a reminder that it might not be a straight line move, however, with the focus now squarely on weekly U.S. jobless claims data later and a monthly euro zone inflation print on Friday.
“If you don’t get confirmation of the slowing economic direction from every single piece of data every single day we risk running out of momentum on the big trades,” Societe Generale FX strategist, Kit Juckes, said.
“Until we get to the point where rate cuts are just around the corner, everything is going to be very stop-start. The dollar sell-off is stop-start, the bond market rally is really stop-start and the equity market is all over the place.”
Key government bond market borrowing costs resumed their broad downward trend on Thursday, driven by increasing confidence that rate cuts are coming next year.
Germany’s 10-year bond yield dipped to 2.62% but held above the previous day’s two-month low of 2.568%, while sterling sank to a six-month low against the euro as dealers in London inched closer their predictions on when the Bank of England (BoE) will start cutting rates. EUR/GVD
Many now think it might be as soon as May although BoE policymaker Meg Greene warned on Thursday that investors are missing the message that central banks have been pushing recently that interest rates will remain higher for longer.
“I think markets globally haven’t really clocked on to this,” Greene told Bloomberg Television, adding that the BoE was not talking about cutting rates.
CHINA PROPERTY
Asian stocks fell overnight as new Chinese data showed continued weakness in its problem-hit property sector which dented recent optimism about a recovery in the world’s second-largest economy.
While data this week showed China’s industrial and retail sectors are now making a comeback, figures have also shown a sharp drop in property investment and weak home prices, underscoring the ongoing drag the sector is having.
There was mixed news from Japan too, where exports grew for a second straight month in October but at a sharply slower pace due to slumping China-bound shipments of chips and steel.
“The weak economic data from both countries indicate the fact that the global economy is slowing down, highlighting ongoing macro headwinds that businesses face,” said Tina Teng, market analyst at CMC Markets.
XI AND BIDEN
Australian shares (.AXJO) ended their day down 0.7% as strong wage data indicated that inflationary pressures there are still running high.
Japan’s Nikkei (.N225) dipped 0.3%, moving into reverse after it, along with the main MSCI Asian and emerging market indexes, all posted their biggest gains in a year on Wednesday.
Chinese stocks showed some disappointment at Xi and Biden’s first meeting in years, with Shanghai’s blue-chip CSI300 index (.CSI300) closing down 1% and Hong Kong’s Hang Seng index (.HSI) ending 1.3% lower.
While the two leaders agreed to resume military-to-military communications and cooperate on anti-drug policies, a sign ties are improving, some investors were disappointed at a lack of other breakthroughs in the talks.
The MSCI main 47-country global stocks index (.MIWD00000PUS) was down for the first time in five sessions after a near 8% surge this month.
Wall Street futures pointed to a slightly weaker start there too, although there was modest relief that the Senate had overwhelmingly approved a temporary funding measure to avert another U.S. government shutdown for now.
Money market traders have now fully priced in that the Federal Reserve will keep U.S. interest rates steady in December. They see the first rate cut of the cycle in May.
The yield on benchmark 10-year Treasury notes was back under 4.5% compared with its U.S. close of 4.537% on Wednesday. The two-year yield hovered at 4.88% compared with a U.S. close of 4.916%.
In currencies, the euro was flat at $1.0848, having gained 2.5% in a month, while the dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was fractionally higher.
Oil traders, meanwhile, nudged U.S. crude down 0.3% to $76.55 a barrel. Brent crude was at $80.90 per barrel while safe-haven gold was slightly higher at $1,965 per ounce .
Additional reporting by Julie Zhu in Hong Kong; Editing by Christina Fincher and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
A man looks at an electric board displaying the Nikkei stock average outside a brokerage in Tokyo, Japan June 14, 2023. REUTERS/Kim Kyung-Hoon/File Photo Acquire Licensing Rights
SYDNEY, Nov 9 (Reuters) – Asian share markets rallied on Thursday and the dollar firmed, even as global investors again sold off the troubled mainland Chinese property sector.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was up 0.1%, and is up 4.3% so far this month.
The yield on benchmark 10-year Treasury notes reached 4.4902% compared with their U.S. close of 4.508% on Wednesday.
The two-year yield , which rises with traders’ expectations of higher Fed fund rates, touched 4.9277% compared with a U.S. close of 4.936%.
Australian shares (.AXJO) were up 0.26%, while Japan’s Nikkei stock index (.N225) rose 1.53%.
Hong Kong’s Hang Seng Index (.HSI) reversed an early gain and was down 0.25% in the afternoon while China’s bluechip CSI300 Index (.CSI300) was 0.1% higher.
China’s troubled property sector is being closely watched on Thursday after most major stocks rallied one day earlier following a Reuters report that Ping An Insurance Group had been asked by the Chinese authorities to take a controlling stake in Country Garden Holdings (2007.HK) .
A spokesperson for Ping An (601318.SS) said the company had not been approached by the government and denied the Reuters report that cited four sources familiar with the plan.
The Hang Seng Mainland Properties Index (.HSMPI) shed 3.73% on Thursday and the Hang Seng Properties Index (.HSNP), which covers Hong Kong developers, was down 0.7%.
“I think for equities investors, they are still shying away from Chinese property because there are so many unknowns,” said Jason Lui, BNP Paribas’s Head of APAC Equity & Derivative Strategy.
“It’s difficult to ask investors to go back to pre-property downturn days, fundamentally property is going to play a very different role in Chinese economic development going forward.
“Property needs to stop being a drag on GDP and sentiment so investors can move on to the real growth drivers.”
In early European trades, the pan-region Euro Stoxx 50 futures were up 0.1%, German DAX futures were down 0.05%, FTSE futures were down 0.16% at 7,401.5,
U.S. stock futures, the S&P 500 e-minis , were down 0.06% at 4,396.8.
Chinese inflation figures for October published on Thursday showed a 0.1% decline compared to September and a 0.2% fall from one year, according to official statistics.
The dollar dropped 0.03% against the yen to 150.93 . It is moving back towards its high this year of 151.74 on Oct. 31.
The European single currency was up 0.0% on the day at $1.0708, having gained 1.25% in a month, while the dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was up at 105.51.
The dollar has rebounded from last week’s sharp sell-off on rising confidence the Fed has ended raising rates. There is less agreement on whether a rate cut is on the horizon with inflation still above the U.S. Federal Reserve’s 2% target.
On Wall Street, the S&P 500 (.SPX) rose 0.10% and the Nasdaq Composite (.IXIC) added 0.08%. The Dow Jones Industrial Average (.DJI) fell 0.12%.
The S&P 500 rose for the eighth consecutive day, extending its longest win streak in two years.
The Federal Reserve last week kept the benchmark overnight interest rate in the current 5.25%-5.50% range and the central bank is due to meet again mid next month.
The U.S weekly jobless claims published on Thursday will be closely watched as an indicator of the how the country’s labour market is performing. Economists predict claims will reach 219,000 after coming in at 217,000 last week.
Oil prices slid over 2% on Wednesday to their lowest in more than three months on concerns over waning demand in the U.S. and China.
In Asian trading Thursday, U.S. crude ticked up 0.15% to $75.44 a barrel. Brent crude rose to $79.68 per barrel.
Gold was slightly lower. Spot gold was traded at $1948.9332 per ounce.
Reporting by Scott Murdoch; Editing by Tom Hogue and Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
An electronic board shows Shanghai and Shenzhen stock indexes, at the Lujiazui financial district in Shanghai, China October 25, 2022. REUTERS/Aly Song/File Photo Acquire Licensing Rights
SINGAPORE, Oct 19 (Reuters) – Asian shares slid on Thursday as risk aversion prevailed due to mounting worries over Middle East conflict, while the bond sell-off intensified, taking Treasury yields to fresh 16-year highs ahead of a keenly awaited speech from Fed Chair Jerome Powell.
Investors sought safer assets, keeping gold prices near two-month peaks and the dollar firm. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 1.42%.
The broad sell-off in U.S. Treasuries continued into Asian hours with the yield on 10-year notes touching a fresh 16-year high as investors come to grips with the Federal Reserve’s messaging that interest rates may stay higher for longer. Yields rise when bond prices fall.
The gloomy mood is likely to continue as Europe wakes up. Futures indicated stock markets in the region were set for a lower open, with the Eurostoxx 50 futures down 0.61%, German DAX futures down 0.59% and FTSE futures 0.35% lower.
U.S. President Joe Biden pledged to help Israel and the Palestinians during a lightning visit on Wednesday.
The region remained volatile in the aftermath of an explosion at Gaza’s Al-Ahli al-Arabi hospital late on Tuesday, which Palestinian officials said killed 471 people and blamed on what they said was an Israeli air strike. Israel and the U.S. said the cause was a failed rocket launch by Islamist militants in Gaza who denied responsibility.
“It’s a fairly messy, uncertain situation at present,” said Shane Oliver, head of investment strategy and chief economist at AMP in Sydney. “If the conflict remains limited to Israel, that’ll be terrible but markets will learn to live with it as they have with the Ukraine war.”
“If alternatively it expands to encompass key oil producers, notably Iran – which is where the risk is highest – that would be a major problem,” said Oliver.
Oil prices eased on Thursday after OPEC showed no signs of supporting Iran’s call for an oil embargo on Israel and as the United States plans to ease Venezuela sanctions to allow more oil to flow globally.
Oil prices had skipped 2% higher in the previous session on worries over disruptions to global supplies.
Meanwhile, investor concerns of geopolitical risks after a widening U.S. chip export ban cast a shadow over Chinese stocks despite some good news from a flurry of data on Wednesday that underscored an economy that was showing signs of stabilising.
Worries over China’s property sector have also kept investors jittery.
Bondholders of Country Garden (2007.HK) are seeking urgent talks with the company and its advisers after the troubled property developer missed a $15 million coupon repayment, putting it at risk of default, three sources told Reuters.
China’s blue-chip stock index CSI300 (.CSI300) fell 1.61%, while the Hang Seng Index (.HSI) sank 2%. Japan’s Nikkei (.N225) sank 1.58%.
AWAITING POWELL
The spotlight will now be on Fed Chair Jerome Powell, who will take the podium in New York on Thursday with his colleagues at the U.S. central bank in apparent agreement to hold interest rates unchanged at their next meeting in two weeks.
A Reuters poll of economists indicated the Federal Reserve will keep its key interest rate on hold on Nov. 1 and may wait longer than previously thought before cutting it.
While a slight majority still see a cut before the middle of 2024, a significant minority of forecasters, around 45%, now see no rate reduction until the second half of next year or later, up from 29% in the last poll.
“I think he (Powell) will hedge his bets in this environment,” said AMP’s Oliver, noting that Powell will likely reinforce the higher for longer view.
The yield on 10-year Treasury notes was up 6.4 basis points to 4.966%, touching highest since mid-2007.
The dollar index , which measures U.S. currency against six rivals, rose 0.056%%. The Japanese yen was at 149.80 per dollar.
U.S. crude eased 0.16% to $88.18 per barrel and Brent was at $91.11, down 0.43% on the day.
Spot gold was at $1,948.42 per ounce, just shy of $1,962.39 its highest since Aug. 1 touched earlier this week. Gold prices are up 6% in the past two weeks.
Reporting by Ankur Banerjee; Editing by Christopher Cushing and Lincoln Feast.
Our Standards: The Thomson Reuters Trust Principles.
[1/2]The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 26, 2023. REUTERS/Staff/File Photo Acquire Licensing Rights
LONDON/HONG KONG, Sept 27 (Reuters) – Global stocks inched higher on Wednesday as investors found a footing after a sharp sell-off the previous day, while U.S. Treasury yields dipped after hitting their highest level since 2007.
Stocks and bonds have dropped in recent weeks as investors come to terms with the idea that central banks will hold interest rates “higher for longer” than previously expected, as officials try to squeeze inflation out of economies.
The Europe-wide STOXX 600 index (.STOXX) was up 0.2% on Wednesday, after falling 0.6% in the previous session in its fourth straight daily drop.
MSCI’s index of global stocks (.MIWD00000PUS) was little changed after falling 1.2% the previous day. The index has fallen 4.5% since the start of September.
Germany’s Dax index (.GDAXI) was up 0.05% while Britain’s FTSE 100 (.FTSE) was flat. In Asia overnight, Japan’s Nikkei 225 index (.N225) rose 0.18%.
At the root of the recent equity sell-off, said Jan von Gerich, chief analyst at Nordea, has been a sharp rise in bond yields as traders have cut their bets that central banks will lower interest rates any time soon.
“The latest catalyst has been the increase in bond yields, so if that stabilises then maybe the equity market stabilises as well,” he said.
“The big picture outlook is that we’re probably close to the peak (in bond yields) but the near-term momentum is still upwards.”
On Wednesday, the yield on the 10-year U.S. Treasury note was down 5 basis points to 4.507%, after touching its highest level since October 2007 on Tuesday at 4.566%. A bond’s yield rises as its price falls, and vice versa.
Also on investors’ minds is a looming U.S. government shutdown; further signs of an economic slump in China; and a recent rise in oil prices.
U.S. equity futures picked up as bond yields fell, with contracts for the benchmark S&P 500 stock index 0.43% higher. Dow Jones futures were 0.35% higher while Nasdaq futures were up 0.46%.
The Dow posted its biggest one-day percentage drop since March on Tuesday, while all three major averages ended at their lowest closing levels in well over three months.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was 0.12% higher. The index is down 3.7% so far this month.
Chinese corporate health was a focal point. Profits at China’s industrial firms fell 11.7% in the first eight months of the year, albeit a smaller decline than the 15.5% drop for the first seven months.
“The stabilising industrial profits are simply not significant enough to override concerns about risks, especially in real estate,” said Gary Ng, Asia Pacific senior economist at Natixis.
As stress spreads in the Chinese property sector, Bloomberg reported that the chairman of beleaguered Chinese property group Evergrande has been placed under police surveillance.
The dollar index , which tracks the greenback against a basket of currencies, was roughly flat at 106.2. It climbed to 106.32 earlier in the session, its highest since Nov. 30.
U.S. crude oil was 1.14% higher to $91.42 a barrel. Brent crude rose 0.85% to $94.76 per barrel.
The U.S. Senate on Tuesday took a step forward on a bipartisan bill meant to stop the government from shutting down in just five days, but the House remains hamstrung by divisions between Republican members.
Meanwhile, investors were also on the lookout for government intervention in the Japanese yen after it fell past the 149 per dollar mark on Tuesday for the first time in just under a year.
Reporting by Harry Robertson in London and Julie Zhu in Hong Kong; Editing by Jamie Freed, Edwina Gibbs and Anil D’Silva
Our Standards: The Thomson Reuters Trust Principles.
TOKYO, Sept 19 (Reuters) – Asian shares sank on Tuesday as worries about the Chinese property sector weighed on markets from Hong Kong to Australia, while Japanese investors sold chip stocks on their return from a holiday-extended weekend.
Benchmark U.S. Treasury yields hovered near 16-year peaks and the dollar held close to six-month highs as traders braced for a Federal Reserve rate decision on Wednesday, in a week that also sees policy decisions from the Bank of Japan and Bank of England, among others.
Crude oil continued its rally amid tightening supply, stoking worries about stagflation.
MSCI’s broadest index of Asia-Pacific shares (.MIAP00000PUS) slipped 0.3%.
Japan’s Nikkei (.N225) tumbled 1.1% under the weight of big losses for chip-related stocks including Tokyo Electron (8035.T) and Advantest (6857.T).
Japanese markets were closed Monday, when Asian tech stocks sold off following a Reuters report that TSMC (2330.TW) had asked its major vendors to delay deliveries.
That stock sank 0.4% on Tuesday, flipping from an earlier gain of as much as 0.6%. It tumbled 3.2% on Monday.
John Pearce, CIO at Unisuper, called the TSMC news “surprising.”
“The one thing you were almost certain of was that demand for semiconductors was only one way,” he said.
Hong Kong’s Hang Seng (.HSI) declined 0.1%, with a subindex of tech stocks (.HSTECH) sliding 0.6%. An index of mainland blue chips (.CSI300) fell 0.3%.
Chinese property stocks were volatile, with a subindex of Hang Seng developers (.HSMPI) dropping as much as 1.2% at one point, before flipping to positive territory around lunchtime, although it was last off 0.4%.
Australia’s stock benchmark (.AXJO) dropped 0.4%, sagging under the weight of mining stocks (.AXMM) amid pessimism over Chinese demand.
Providing some rays of hope, though, Country Garden (2007.HK) won approval from creditors to extend repayment on another onshore bond, the last in the batch of eight bonds it has been seeking extensions for, sources said.
Peer Sunac China Holdings (1918.HK) got creditor approval for its $9 billion offshore debt restructuring plan, the first green light of a debt overhaul by a major Chinese developer.
Weakness in Asian equities weighed on U.S. stock futures , which pointed 0.1% lower. Pan-European Stoxx 50 futures were flat.
Currency markets were subdued, with the U.S. dollar index – which measures the currency against six major peers – rising 0.09% to 105.17, edging back toward last week’s six-month peak of 105.43.
The dollar added 0.1% to 147.75 yen , bringing it closer to last week’s 10-month top of 147.95.
The euro eased 0.1% to $1.0679.
Ten-year yields were little changed at just above 4.31%, holding close to the 4.366% level reached on Aug. 22, which was the highest since 2007.
“You can’t blame people for keeping to the sidelines for now,” with the Fed headlining a parade of central bank meetings this week, Kyle Rodda, senior financial market analyst at Capital.com, wrote in a note.
“Given the variability in outcomes, there will inevitably be crosscurrents in the markets,” Rodda said. “Price action could be choppy, with risk needing to be managed more carefully.”
Traders are all but certain the Fed will leave rates steady again at the conclusion of a two-day meeting that begins later Tuesday, but are split on the chances on another quarter-point increase by year-end.
Fed officials will also release their latest predictions on the economy and where rates are likely to be over the coming quarters.
Meanwhile, oil prices rose in early trade on Tuesday for the fourth consecutive session, as weak shale output in the U.S. spurred further concerns about a supply deficit stemming from extended production cuts by Saudi Arabia and Russia.
U.S. West Texas Intermediate crude futures rose 99 cents, or 1.1%, to $92.47, while global oil benchmark Brent crude futures rose 58 cents, or 0.61%, to $95.01 a barrel.
“Given how supply-constrained energy markets are likely to become, especially amidst harsher weather approaching the end of the year, higher oil prices are both an upside risk to inflation and a downside risk to growth,” Capital.com’s Rodda said.
“Markets that don’t export energy and suffer from energy insecurity could underperform.”
Reporting by Kevin Buckland; Additional reporting by Lewis Jackson; Editing by Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
A woman walks past a screen displaying the Hang Seng Index at Central district, in Hong Kong, China March 21, 2023. REUTERS/Tyrone Siu/File Photo Acquire Licensing Rights
SYDNEY, Sept 18 (Reuters) – Asian shares fell and the dollar was firm on Monday as investors looked ahead to policy meetings from the Federal Reserve, the Bank of Japan and other central banks this week.
Europe is set for a subdued open, with EUROSTOXX 50 futures off 0.1%. S&P 500 futures advanced 0.2% while Nasdaq futures edged up 0.1%.
Oil prices hit fresh 10-month peaks, further stoking inflationary pressures. U.S. West Texas Intermediate crude futures gained 0.8% to $91.52, their highest level since November, while Brent crude futures rose 0.7% to $94.55 per barrel.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.7%. Japan’s Nikkei (.N225) is closed for a public holiday.
Technology shares in the region retreated, with Taiwan’s TSMC (2330.TW), the world’s top contract chipmaker, falling 3% after Reuters reported that it has told its major suppliers to delay the delivery of high-end chipmaking equipment
In China, better-than-expected factory output and retail sales in the world’s second largest economy have aided Chinese bluechips (.CSI300) which were up 0.4%.
But property sector woes dragged Hong Kong’s Hang Seng (.HSI) 1% lower.
Zhongrong International Trust, which has exposure to Chinese property developers, said over the weekend it was unable to make payments on some trust products on time.
“Despite the encouraging sign of stabilization, the property market continues to be the missing puzzle piece in the economic picture,” said Tommy Xie, head of Greater China Research at OCBC Bank.
“The on-the-ground feedback indicates a rise in property viewing activities; however, most prospective buyers are not in a hurry to finalize deals due to the increasing supply of apartments post relaxation.”
Shares in embattled China Evergrande Group (3333.HK) fell as much as 25% after police in southern China detained some staff at its wealth management unit, though they later pared losses to be down 1.6%.
This week, global central banks will take centre stage, with five of those overseeing the 10 most heavily traded currencies holding rate-setting meetings. A swathe of emerging market central banks will also hold meetings.
Markets are fully priced for a second straight pause from the Fed on Wednesday, with its targeted range expected to be unchanged at 5.25% to 5.5%, so the focus will be on the updated economic and rates projections. They see about 80 basis points of cuts next year.
“In theory, the FOMC meeting should be a low-volatility affair, but it is a risk that needs to be managed,” said Chris Weston, head of research at Pepperstone.
Weston added that if the Fed revises up its rate projections for 2024, that would see rate cuts being priced out, resulting in renewed interest in the U.S. dollar and downward pressure on global shares.
On Thursday, Bank of England is tipped to hike for the 15th time and take benchmark borrowing costs to 5.5%.
Bank of Japan is the key risk event on Friday. Markets are looking for any signs that the BOJ could be moving away from its ultra-loose policy faster than previously thought, after recent comments by Governor Kazuo Ueda sent yields much higher.
Last Friday, Wall Street ended sharply lower as U.S. industrial labour action weighed on auto shares. Rising Treasury yields also pressured Amazon (AMZN.O) and other megacap growth companies.
Cash Treasuries were not traded in Asia with Tokyo shut. Treasury yields edged higher on Friday, with the two-year above the 5% threshold.
In the currency markets, the U.S. dollar was still standing strong near its six-month top at 105.25 against a basket of major currencies.
The euro gained 0.1% to $1.0667, after slumping to a 3-1/2 month low of $1.0632 last week as the European Central Bank signalled its rate hikes could be over.
The price of gold was 0.2% higher at $1,928.13 per ounce.
Reporting by Stella Qiu; Editing by Shri Navaratnam and Edwina Gibbs
Our Standards: The Thomson Reuters Trust Principles.
SYDNEY, Sept 11 (Reuters) – Asia stock markets started to turn positive later on Monday even though investors in China sold off shares in property developers, remaining unconvinced by authorities’ efforts to revive activity in the mainland real estate market.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) reversed earlier losses and was up 0.3%, after U.S. stocks ended the previous session with mild gains.
Australian shares (.AXJO) gained 0.36% and Japan’s Nikkei stock index (.N225) slid 0.49%.
The yen appreciated sharply against the dollar after Bank of Japan governor Kazuo Ueda stoked hopes the central bank could soon see a shift away from negative rates.
The dollar on Monday dropped 1.12% to 146.16 yen and it remains some way off its high this year of 147.87 reached earlier this month.
In Hong Kong, the Hang Seng Index (.HSI) halved its loss from earlier in the day to be off 0.66% by the afternoon session, as investors remained wary of China’s troubled property sector.
A more positive tone was seen across futures markets which pointed towards a better start for most major European indexes.
In early trades, Euro Stoxx 50 futures were up 0.26%, German DAX futures were up 0.17% and FTSE futures were up 0.29%
U.S. stock futures, the S&P 500 e-minis , were up 0.24% at 4,472.3.
Hong Kong’s Hang Seng Property Index (.HSNP), a gauge of Hong Kong’s top developers, was still down 3.24% while the mainland property index (.HSMPI) was off 1.9%. It was earlier more than 3% in the red.
“We need the property market to stabilize first in order for any meaningful kind of economic rebound to happen in China,” said David Chao, Invesco’s Asia Pacific market strategist.
In recent weeks China’s authorities – including the housing ministry, central bank and financial regulator – have rolled out a series of measures, such as easing borrowing rules, to support the debt-riddled property sector, and there are some expectations for more steps to revive demand in major cities like Beijing, Shanghai and Shenzhen.
Hong Kong stocks were also dampened as e-commerce giant Alibaba Group (9988.HK) dropped 2.5% on the surprise departure of outgoing CEO Daniel Zhang from its cloud unit.
China’s bluechip CSI300 Index (.CSI300) rallied during the session and was up 1.23% as investors expected more economic stimulus.
“In the near term investors are cautious towards China but we are quite encouraged that the policies have turned from more piecemeal to more targeted in the past few weeks, especially with property,” said Marcella Chow, JPMorgan Asset Management market strategist said.
In the United States, the Consumer Price Index (CPI) for August, due out on Wednesday, is expected to rise 0.6% month-on-month for August, which would take the year on year rate to 3.6%, according to a Wells Fargo research note.
Investors are pricing in a 93% probability that the Fed will keep rates at current levels after its next meeting ends on Sept. 20 but only a 53.5% change for another pause at the November meeting, according to CME group’s FedWatch Tool.
The yield on benchmark 10-year Treasury notes rose to 4.294% compared with its U.S. close of 4.256% on Friday. The two-year yield , which rises with traders’ expectations of higher Fed fund rates, touched 4.9948% compared with a U.S. close of 4.984%.
The European single currency was up 0.3% on the day at $1.0709, having lost 1.09% in a month, while the dollar index , which tracks the greenback against a basket of currencies of other major trading partners, was down 0.23% at 104.61.
In China, there was an easing of deflationary pressures with consumer price index (CPI) rising 0.1% in August from a year earlier. That was slower than the median estimate for a 0.2% increase in a Reuters poll but much stronger than a 0.3% decline in July.
China also had its smallest drop in factory prices in five months. The producer price index fell 3.0% from a year earlier, in line with expectations, after a drop of 4.4% in July.
China’s central bank yanked the yuan off a 16-year low against the dollar on Monday by setting a daily midpoint guidance rate with the strongest bias on record, signaling increasing discomfort with the currency’s recent weakness.
In the spot market, the onshore yuan was changing hands at 7.3245 per dollar at 0210 GMT, after hitting 7.3510 on Friday, which as 6.1% down from the start of the year and a level last seen during the global financial crisis.
U.S. crude dipped 0.19% to $87.34 a barrel. Brent crude shifted into positive territory to be up 0.2% $90.80 per barrel.
Spot gold was trading slightly higher at $1,927.08 per ounce.
Reporting by Scott Murdoch in Sydney; Editing by Edwina Gibbs & Simon Cameron-Moore
Our Standards: The Thomson Reuters Trust Principles.
A smartphone with a displayed TSMC (Taiwan Semiconductor Manufacturing Company) logo is placed on a computer motherboard in this illustration taken March 6, 2023. REUTERS/Dado Ruvic/Illustration/File Photo Acquire Licensing Rights
TAIPEI, Sept 6 (Reuters) – TSMC (2330.TW), the world’s largest contract chipmaker, will decide this week whether to invest in chip designer Arm Holdings’ blockbuster initial public offering (IPO), Chairman Mark Liu said on Wednesday.
Speaking on the sidelines of the SEMICON Taiwan summit, Liu said his company was still evaluating the matter and, when pressed on when a decision may come, he added “this week”.
“Arm is an important element of our ecosystem, our technology and our customers’ ecosystem. We want it to be successful, we want it to be healthy. That’s the bottom line,” Liu said.
On Tuesday, SoftBank Group’s (9984.T) Arm Holdings launched the roadshow for its IPO as the chip designer tries to convince investors it is worth as much as $52 billion in this year’s biggest share sale.
Arm has already signed up many of its major clients as cornerstone investors in its IPO, including Apple (AAPL.O), Nvidia (NVDA.O), Alphabet (GOOGL.O), Advanced Micro Devices (AMD.O), Intel (INTC.O) and Samsung Electronics (005930.KS).
Speaking about Taiwan Semiconductor Manufacturing Co Ltd’s (TSMC) plant in the U.S. state of Arizona, where it is investing $40 billion in a massive project, Liu said he had no concern over its ability to be successful.
“I just came from Arizona last month. Any project of that new fertile ground will have some learning curve. In the past five months the improvement has been tremendous. I’m sure it will be a very successful project,” he said.
In July, TSMC said production due to start next year at its first chip fabrication facility, or fab, in Arizona would be delayed until 2025 due a shortage of specialist workers.
Reporting by Ben Blanchard; Editing by Anne Marie Roantree and Stephen Coates
Our Standards: The Thomson Reuters Trust Principles.
A woman walks past a man examining an electronic board showing Japan’s Nikkei average and stock quotations outside a brokerage, in Tokyo, Japan, March 20, 2023. REUTERS/Androniki Christodoulou/File Photo
SYDNEY, Aug 15 (Reuters) – Asian stock markets wallowed at one-month lows on Tuesday and the yuan struggled as China cut interest rates as another round of disappointing data underscored its economic malaise.
Cuts to China’s one-year loans to financial institutions, at 15 basis points, were the largest since the outset of the COVID pandemic. Industrial output and retail sales growth both slowed from a month earlier to a year-on-year pace of 3.7% and 2.5% respectively, missing expectations.
The yuan dropped to its lowest in 9-1/2 months, and sources told Reuters that China’s major state-owned banks stepped into the spot market to steady the currency. After that, it hit 7.2743 per dollar, having been as low as 7.2875.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) edged down 0.1% to 509.12, not far from a one-month low on Monday of 506.3 as worry about China’s frozen property sector swept across regional markets.
Property investment, sales and fundraising extended their slide in July, the data on Tuesday showed. New construction starts by floor area are down nearly 25% year-on-year and highlight how there is neither the appetite nor funds to build or buy.
“We reckon that markets still underestimate the aftermath of the significant collapse in China’s property sector, which accounts for more than half of global new home sales,” said analysts at Japanese bank Nomura.
“The chain reaction triggered by slumping new home sales may lead to a rising number of developers’ defaults, a sharp contraction of government revenue, falling demand for construction materials, declining wages… weaker consumption, and faltering financial institutions.”
Hong Kong’s Hang Seng (.HSI) fell 0.8% to within a whisker of Monday’s one-month low. Chinese blue chips (.CSI300) fell 0.2%.
Chinese government bonds rallied, driving 10-year and five-year yields to their lowest since 2020 at 2.56% and 2.35%, respectively. With U.S. yields rising, the gap over Chinese yields at the 10-year tenor hit its widest in 16 years at 168.8 bps.
Shares in under-pressure developer Country Garden (2007.HK) bounced 5% to HK$0.83. The once-sound developer is struggling to make debt repayments and its woes are a chilling signal for the broader market. In January 2020 the shares traded at HK$13.
Contagion concerns grew as Zhongrong International Trust Co, a major trust company traditionally exposed to real estate, missed repayment obligations on some investment products.
J.P. Morgan analysts warned of a “vicious cycle” of real estate financing challenges and said trust defaults could wipe 0.3% to 0.4% from China’s growth directly.
JAPAN GDP JUMPS
China’s weak data overshadowed a surprise in Japan, where tourism and car exports sent annualised growth surging to 6% in the second quarter, well above the 3.1% analysts had expected. That lifted the Nikkei (.N225) by 0.8%.
“The export news was heartening and bodes well for Japan’s continued trade competitiveness,” said John Vail, chief global strategist at Nikko Asset Management in Tokyo, though he cautioned that domestic consumption indicators were soft.
The yuan’s woes, however, kept the U.S. dollar pretty firm and the yen showed little reaction. The yen hit a nine-month low of 145.60 to the dollar, capped as controlled Japanese yields leave a wide gap on rising U.S. yields.
In Australia, wages growth came in steady for the last quarter, just below expectations, and added to the case for a pause in interest rate hikes for the time being.
The Aussie dollar and the kiwi held steady just above major support levels.
The euro recovered slightly from overnight losses to $1.0909.
Wall Street indexes rose on Monday, led by tech shares and especially chipmaker Nvidia (NVDA.O), which jumped 7.1% after Morgan Stanley analysts called it a “top pick”.
Nasdaq 100 futures were up 0.2% in the Asia session. The S&P 500 (.SPX) rose 0.6% overnight and futures rose 0.1% in Asia. European futures rose 0.4%.
In bond markets, benchmark 10-year Treasury yields rose 2 basis points to 4.20% on Tuesday. Two-year yields were steady at 4.97%.
Brent crude futures were steady at $86.30 a barrel.
Reporting by Tom Westbrook; Editing by Jamie Freed
Our Standards: The Thomson Reuters Trust Principles.
Passersby walk past an electric board displaying Japan’s Nikkei share average outside a brokerage in Tokyo, Japan April 18, 2023. REUTERS/Issei Kato
SYDNEY, Aug 14 (Reuters) – Shares slid on Monday as China’s property woes amplified the case for stimulus even as Beijing seemed deaf to the calls, while rising Treasury yields lifted the dollar, which briefly poked its head above the closely watched 145 yen level.
There was plenty to be watching on the geopolitical front too, as Argentine voters punished the two main political forces in a primary election on Sunday, pushing a rock-singing libertarian outsider candidate into first place.
A day earlier, a Russian warship fired warning shots at a cargo ship in the southwestern Black Sea, heralding a new stage of the war that could impact oil and food prices. The Russian rouble on Monday softened past the psychologically key 100 per U.S. dollar threshold for the first time since March, with President Vladimir Putin’s economic advisor blaming loose monetary policy.
MSCI’s world index (.MIWD00000PUS) was down 0.2%, with most of the losses driven by Asian stocks. The main ex-Japan index was down (.MIAPJ0000PUS) 1.7%, after shedding 2% last week. Japan’s Nikkei (.N225) was off 1.3%.
Europe’s broad STOXX 600 benchmark (.STOXX) was flat but the miner-heavy and China-exposed FTSE lagged, falling 0.2%. (.FTSE)
“A crisis in the Chinese real estate sector is a story the market has heard before and not one which has typically come with a happy ending for stocks,” said AJ Bell investment director Russ Mould.
Trouble in China’s largest private property developer, Country Garden (2007.HK), could have a chilling effect on homebuyers and financial institutions.
The company’s shares plunged 18% to a record low on Monday after its onshore bonds were suspended.
That was a fresh blow to policymakers trying to shore up confidence in a stuttering economy, aspirations that were not helped by weekend news two Chinese listed companies had not received payment on maturing investment products from Zhongrong International Trust Co.
Chinese blue chips (.CSI300) fell 0.73%, on top of a 3.4% decline last week, amid disappointing economic news culminating in a dire report on new bank loans in July.
U.S. share futures shrugged off the news however, rising 0.2%, following losses on Friday when surprisingly high readings on U.S. producer prices tested market optimism that inflation would cool enough to avoid further rate hikes.
CONSUMERS KEEP CONSUMING
On this week’s data docket are figures on U.S. retail sales this week are forecast to show a 0.4% pick up in spending, with risks on the high side thanks in part to Amazon’s Prime Day.
Such an outcome would challenge the market’s benign outlook for rates, with futures implying a 70% chance the Federal Reserve is done hiking. The market also has more than 120 basis points of cuts priced in for next year starting from around March.
Minutes of the Fed’s last meeting are due on Wednesday and could show members wanted to keep their options open on further hikes.
The resilience of the economy combined with a truly massive government borrowing requirement kept 10-year Treasury yields up at 4.15%, after a rise of 12 basis points last week.
That rise juiced the dollar against the low-yielding yen, hoisting it as far as 145.22 and a peak not seen since November last year.
Concerns about possible intervention then saw it edge back to 144.92, though the broad sense in markets is Japanese authorities are not quite ready to step in again to prop up the currency.
The euro was more range-bound on the dollar at $1.0954 , though the dollar climbed on its Australian and New Zealand counterparts, as proxies for China risk.
The ascent of the dollar and yields was weighing on gold at $1,914 an ounce , having fallen for three weeks in a row.
Monday saw some profit-taking in oil markets nudging Brent down 0.3% to $86.56 a barrel, while U.S. crude fell 0.37% to $82.9 per barrel.
Reporting by Wayne Cole and Alun John, additional reporting by Ankur Bannerjee in Singapore;
Editing by Sam Holmes and Bernadette Baum
Our Standards: The Thomson Reuters Trust Principles.