Asian stocks mixed in big week for central banks: Market recap

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(Bloomberg) – Stocks in Asia were mixed at the start of a week filled with central bank policy decisions, as Chinese investors continued to wait for signs of more support.

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Stocks rose in Japan after a report late Friday said Bank of Japan officials saw no urgent need to address the side effects of their ultra-loose monetary policy.

Things were less bullish in Hong Kong and China as stocks fell. Chinese stocks recorded their worst week in four on Friday, despite a series of consumer and business stimulus promises.

Traders brace for possible signs of additional stimulus ahead of a Politburo meeting. But expectations from global fund managers are low as Beijing tries to sustain growth without the kind of strong action that could create asset bubbles.

“The market is expecting a lot (of stimulus) but has so far refrained from expressing a strong view on financial assets, and the CN50, CHINAH and Yuan have yet to see any trend,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.

Contracts for US stocks were mostly flat in Asia on Monday after the S&P 500 closed little changed on Friday and the Nasdaq 100 saw continued selling in tech companies after a string of disappointing results earlier in the week.

The yen edged higher after weakening more than 2% last week, with the steepest part of the move coming after the BOJ report. Most major currencies traded in tight ranges against the dollar on Monday.

The offshore yuan was little changed at around 7.18 to the dollar. The People’s Bank of China on Monday set the yuan’s daily benchmark rate above the average estimate.

“7.3 should be a cyclical low for the Chinese yuan” if the PBOC is ready to pump in more liquidity as the Federal Reserve nears its tightening cycle, Hao Hong, partner and chief economist at Grow Investment Group, told Bloomberg Television.

Treasury yields were little changed across durations during Asian trading hours. Yields on long-term Australian bonds remained stable, while those on New Zealand bonds fell.

Eyes on central banks

Central bank results and decisions will be the main focus this week. American heavyweights including Alphabet Inc., Exxon Mobil Corp. and Meta Platforms Inc., are all expected to report, while in Asia investors will be watching names such as Samsung Electronics Co., Rio Tinto and Hitachi Ltd.

Traders are positioning themselves for the Fed and European Central Bank to raise interest rates and signal whether further hikes are likely. The BOJ should remain firm, allowing the spread with its peers to widen pending sustained inflation.

“The Fed shouldn’t signal another jump in September because doing so for the June meeting really handcuffed the Fed at a time when it needed maximum flexibility,” Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., wrote in a note. “Given the strength of the labor market, we believe the right thing to do for the Fed is to emphasize a more data-driven approach and emphasize that a jump in September should not be assumed.”

In commodities, oil edged lower after posting its fourth weekly gain amid tentative signs of tightening in global markets. Gold opened the week little changed after slipping against a stronger dollar on Friday.

Key events this week:

  • Eurozone S&P Global Manufacturing & Services PMI, Monday

  • UK S&P Global / CIPS UK Manufacturing & Services PMI, Monday

  • Conf. Consumer Confidence Council, Tuesday

  • New home sales in the United States, Wednesday

  • FOMC Rate Decision, Fed Chair Powell Press Conference, Wednesday

  • Chinese industrial profits, Thursday

  • ECB rate decision Thursday

  • U.S. GDP, Durable Goods Orders, Initial Jobless Claims, Wholesale Inventories, Thursday

  • Japan Tokyo CPI, Friday

  • BOJ Rate Decision Friday

  • Eurozone Economic Confidence, Consumer Confidence, Friday

  • US Consumer Income, Employment Cost Index, University of Michigan Consumer Sentiment, Friday

Some of the major movements in the markets:

Shares

  • S&P 500 futures were little changed at 10:37 a.m. Tokyo time. The S&P 500 was little changed on Friday

  • Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.3%

  • Japan’s Topix index rose 0.9%

  • Hong Kong’s Hang Seng index fell 1.5%

  • China’s Shanghai Composite Index fell 0.4%

  • Australia’s S&P/ASX 200 index was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.1123

  • The Japanese yen was little changed at 141.64 per dollar

  • The offshore yuan was little changed at 7.1857 to the dollar

  • The Aussie dollar was little changed at $0.6724

Cryptocurrencies

  • Bitcoin fell 0.7% to $29,933.13

  • Ether fell 0.7% to $1,880.29

Obligations

  • The 10-year Treasury yield was little changed at 3.84%

  • The Japanese 10-year rate rose four basis points to 0.450%

  • Australia’s 10-year yield was little changed at 4.00%

Goods

This story was produced with assistance from Bloomberg Automation.

–With assistance from Brett Miller and Abhishek Vishnoi.

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