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(Bloomberg) — Asian stocks edged lower as traders returned their focus to China’s efforts to halt its economic malaise after markets in the US were shut for the US Labor Day holiday.
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Stocks opened lower in South Korea after inflation accelerated much faster than estimates in August on the back of higher energy costs, reinforcing the case for the central bank to keep the door open to further policy tightening to rein in prices.
Shares also declined in Japan and Australia, where the Reserve Bank of Australia is set to keep rate unchanged for the third straight month in a meeting later Tuesday.
“With inflation expectations still elevated, the central bank is likely to maintain a hawkish bias — and keep it through the second half of 2023,” according to James McIntyre at Bloomberg Economics. “We see the RBA starting to cut rates in the first quarter of 2024.”
Futures for Hong Kong’s Hang Seng index, which jumped almost 3% Monday before paring gains, declined. That came after European shares failed to provide a strong lead for investors, with the Stoxx 600 gauge closing little-changed in low-volume trading after rising as much as 0.8% earlier. US equity futures were subdued in Asia trading.
Traders will be monitoring if Hong Kong and mainland China stock markets will be able to sustain Monday’s advances. The country’s beleaguered property sector is getting a boost from the announcement that down-payment thresholds across the nation would be lowered, with Shanghai and Beijing seen as benefiting the most.
A Bloomberg gauge of Chinese developers jumped as much as 8.7% on Monday, with sentiment improving further after news of a weekend surge in home sales in two of its biggest cities, an early sign that government efforts to cushion a record housing slowdown is helping.
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China’s PMI composite and services data to be released Tuesday will provide further indications on whether Asia’s biggest economy is starting to emerge from its post-pandemic torpor.
The dollar steadied, while Treasuries slightly lower across tenors as cash trading resumed. Australian bonds also fell ahead of the central bank’s meeting, with yield on the three-year rising two basis points and that on the 10-year up three basis points.
While Treasury markets were closed on Monday, bond yields inched higher in the euro zone, with rate-setters seemingly divided on whether policy needs to be tightened further this month, given above-forecast inflation and sluggish growth. In a speech in London, European Central Bank President Christine Lagarde avoided signaling whether policymakers will raise or hold interest rates next week.
Oil continued to trade near the highest level since mid-November after a surge driven by supply cuts from OPEC+ that have tightened the market. Crude has rallied by about a quarter since late June as a result of supply reductions, which have been led by Saudi Arabia and Russia.
On Monday, Europe’s consumer, travel and leisure and mining shares — sectors with exposure to China — advanced. Danish drugmaker Novo Nordisk A/S rose to a new record high, having just become Europe’s most valuable firm. Carmaker Mercedes Benz Group AG added 1% after unveiling a new, longer-range electric vehicle.
Key events this week:
Australia current account, rate decision, Tuesday
China Caixin services PMI, Tuesday
Eurozone S&P Global Eurozone Services PMI, PPI, Tuesday
US factory orders, Tuesday
ECB President Christine Lagarde chairs panel focused on central banks and international sanctions at ECB Legal Conference, Tuesday
Australia GDP, Wednesday
Eurozone retail sales, Wednesday
Germany factory orders, Wednesday
US trade, Wednesday
Canada rate decision, Wednesday
Bank of England Governor Andrew Bailey testifies to the UK parliament’s Treasury Select Committee, Wednesday
Federal Reserve issues Beige Book economic survey, Wednesday
Boston Fed President Susan Collins speaks on the economy at New England Council, Wednesday
China trade, forex reserves, Thursday
Eurozone GDP, Thursday
US initial jobless claims, Thursday
Bank of Canada Governor Tiff Macklem to speak on the Economic Progress Report, Thursday
New York Fed President John Williams participates in moderated discussion at the Bloomberg Market Forum, Thursday
Atlanta Fed President Raphael Bostic speaks on economic outlook at Broward College, Thursday
Japan GDP, Friday
France industrial production, Friday
Germany CPI, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 9:16 a.m. Tokyo time
Nasdaq 100 futures were little changed
Hang Seng futures fell 0.4%
Japan’s Topix fell 0.1%
Australia’s S&P/ASX 200 fell 0.5%
Euro Stoxx 50 futures fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0791
The Japanese yen was little changed at 146.58 per dollar
The offshore yuan was little changed at 7.2800 per dollar
The Australian dollar was little changed at $0.6455
Cryptocurrencies
Bitcoin fell 0.1% to $25,801.76
Ether was little changed at $1,628.15
Bonds
The yield on 10-year Treasuries advanced two basis points to 4.20%
Japan’s 10-year yield advanced one basis point to 0.650%
Australia’s 10-year yield advanced three basis points to 4.12%
Commodities
West Texas Intermediate crude rose 0.4% to $85.85 a barrel
Spot gold fell 0.3% to $1,937.28 an ounce
This story was produced with the assistance of Bloomberg Automation.
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