Asian Stocks Fall as China Support Disappoints: Markets Wrap – Yahoo Finance

November 10, 2024

(Bloomberg) — Asian stocks fell after China's debt swap program was deemed insufficient by some investors and data showed persistent deflationary pressures in the world's second-largest economy.

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Stock prices in the region fell as much as 1.3%, led by heavyweights such as Tencent Holdings and Meituan. China's CSI 300 index fell as much as 1.4% before canceling the loss and rising slightly. An index of Chinese companies listed in Hong Kong fell 1.6%.

The widespread weakness comes as the Chinese government announced a 10 trillion yuan ($1.4 trillion) plan to reduce local government debt risks but stopped short of launching new fiscal stimulus. It reflects deep-seated concerns about the outlook for the world's second-largest economy. In addition to poor inflation, sentiment toward China is also low due to continued weakness in foreign direct investment.

Investors were hoping for a stronger stimulus package from China's main legislative meeting last week that would directly boost demand, especially after Donald Trump's presidential victory brought fresh uncertainty over tariffs. was. To many economists, Beijing's stance suggests it wants to leave room for President Trump to better respond to a potential trade war when he takes office next year.

Ekaterina Vigos, chief investment officer for Asia ex-Japan at AXA Investment Managers, told Bloomberg TV that “the volatility is going to get even bigger” in Chinese stocks. Policy announcements on things like real estate have helped sentiment, but “the fundamental situation hasn't changed yet. We haven't seen it reflected in earnings yet.”

Following President Trump's election, UBS lowered its 2025 growth forecast for China, predicting growth of “about 4%” in 2025 and “much slower” in 2026.

Oil fell for a second straight day, while iron ore fell towards $100 a tonne as the weak outlook for China, its biggest importer, continued to plague the market.

Elsewhere, Taiwan Semiconductor Manufacturing Co. fell following a Reuters report that the U.S. had told the company to stop shipping some advanced chips, often used in AI applications, to Chinese customers.

Bitcoin has surpassed $81,000 for the first time following the president-elect's support for digital assets and the election of pro-cryptocurrency members of Congress. A cluster of smaller cryptocurrencies also rose.

The dollar was largely stable. The yen fell 0.6% against the dollar ahead of Japan's parliamentary vote later on Monday, which will see Prime Minister Shigeru Ishiba remain in office despite his crushing defeat in the national election.

Meanwhile, members of the Bank of Japan's board of directors discussed the need to be cautious about raising the base interest rate, and did not give any clear indication of next month's hike, according to a summary of opinions from the October policy meeting.

Minneapolis Fed President Neel Kashkari suggested over the weekend that the strong U.S. economy could lead the central bank to cut interest rates less than previously expected. However, Kashkari stressed that it is too early to judge the impact of President Trump's policies.

“The market's next move will depend on whether President Trump prioritizes tax cuts or tariff increases, and the impact of each will be very different,” Tony Sycamore, an analyst at IG Markets in Sydney, said in a note. ” he said. “This clarity may still take months, but it's worth remembering that back in 2016, President Trump's first move was to cut taxes and send the stock market soaring, before tariffs on China caused headwinds.” said.

This week, traders will parse data from Australian jobs data to retail sales and industrial production in China, inflation in the US and eurozone, and growth rates in the UK and Japan. A number of Federal Reserve officials are scheduled to speak, which could help outline the central bank's thinking after the election results.

This week's main events: