(Bloomberg) — Stock indexes fell across Asia after Wall Street capped a weak week on the back of a decline, and as falling real estate prices in China continue to dampen market sentiment.
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Shares in Hong Kong fell about 2% at the open, with Country Garden Holdings shares dropping as much as 12%. The CSI 300, the benchmark for onshore Chinese stocks, extended its decline after capping its worst week since March on Friday amid signs of a worsening economy while the offshore yuan hovered near its weakest level this year.
Country Garden, once China’s largest private developer by sales, is in the spotlight as the company runs the risk of joining a slew of defaulters and the nation’s latest economic data is likely to show few signs of a pickup in growth.
Meanwhile in Japan, the yen breached a year’s high of 145.07 per dollar as investors began watching for any signs that the government might intervene as it did last year. The currency weakened for five straight days through Friday while the dollar strength index advanced over the past four weeks as treasury yields rose.
“The lack of verbal intervention so far indicates potential patience on their part,” Saxo Capital Markets strategists, including Charo Chanana, said in a note. “This week’s GDP and CPI data in Japan can be key, as can US data such as retail sales which, if steadier, could continue to push yields higher.”
Treasuries extended declines after U.S. producer prices rose more-than-expected on Friday, threatening to help keep interest rates higher for longer. The yield on New Zealand’s 10-year bond rose to the highest level since 2011, following moves in US bonds.
“Exaggerated”
Friday’s US trading session saw the tech giants drop, and mixed economic data left stocks weak and struggling for direction. In choppy trading, the S&P 500 closed at a one-month low with a drop of just 0.1%. The Nasdaq 100 posted its longest weekly losing streak this year, hovering around 15,000. Nvidia Corp. — which more than tripled in 2023 — extended its four-day decline to 10%.
One-time bond king Bill Gross said the stock and Treasury bulls are wrong because both markets are “overvalued.”
The former chief investment officer of Pacific Investment Management Co. told Bloomberg Television that the fair value of the 10-year Treasury yield is about 4.5%, compared to the current level of 4.15%.
Meanwhile, Friday’s economic reports did little to change swap market bets that the Federal Reserve would hold off on raising interest rates next month. Traders also continued to expect the central bank to signal that its fight against inflation is far from over.
Consumer inflation expectations as measured by the University of Michigan unexpectedly eased in early August, despite higher gasoline and grocery costs. Meanwhile, producer prices rose more than expected last month, mainly due to increases in certain service categories.
However, economists at Goldman Sachs Group Inc. That the Fed will start cutting interest rates by the end of next June, with a gradual quarterly pace of cuts starting from that point.
Oil fell on Monday, after posting its longest streak of weekly gains since mid-2022. Multiple reports predicting an increase in demand gave new impetus to the rush built on increasing risks of supply disruptions and widening Saudi production cuts.
Main events this week:
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China’s medium-term lending, retail sales, industrial production, fixed asset investment, net foreign exchange settlement, Tuesday
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Japanese Industrial Production, GDP, Tue
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UK Unemployment Claims, Unemployment, Tue
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US retail sales, manufacturing empire, business stocks, cross-border investing, Tuesday
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Minutes from the Reserve Bank of Australia’s monetary policy meeting, Tuesday
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Minneapolis Federal Reserve Bank President Neel Kashkari speaks on Tuesday
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Real estate prices in China, Wed
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Eurozone Industrial Production, GDP, Wed
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UK CPI, Wed
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FOMC Meeting Minutes, New Housing, Industrial Production, Wed
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US Initial Jobless Claims, Conf. The board’s leading indicator, Thursday
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Eurozone CPI, Friday
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Japanese CPI, Friday
Some of the major movements in the markets:
Stores
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S&P 500 futures were little changed as of 10:48 a.m. Tokyo time. The S&P 500 fell 0.1% on Friday
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Nasdaq 100 futures have changed little. The Nasdaq 100 fell 0.7%.
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Japan’s Topix fell 0.3%.
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Australia’s S&P/ASX 200 fell 0.4%
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Hong Kong’s Hang Seng fell 1.9%.
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The Shanghai Composite Index fell 0.8%.
currencies
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The Bloomberg Spot Dollar Index has not changed
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The euro fell 0.1 percent to $1.0935
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The Japanese yen remained unchanged at 144.96 per dollar
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The offshore yuan fell 0.1 percent to 7.2707 per dollar
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The Australian dollar fell 0.4% to $0.6473
Digital currencies
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Bitcoin fell 0.6% to $29,235.43
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Ether fell 0.7% to $1,839.58
bonds
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The yield on the 10-year Treasury note advanced three basis points to 4.18%.
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The 10-year Japanese bond yield advanced 3.5 basis points, to 0.620%.
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The 10-year Australian bond yield advanced nine basis points to 4.21%.
goods
This story was produced with help from Bloomberg Automation.
— With assistance from Rita Nazareth and Brett Miller.
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