(Bloomberg) — Asian shares fell on speculation that investors were trimming some of their holdings ahead of a string of events scheduled over the next few days, including key central bank decisions, key economic data and earnings reports from large U.S. companies.
Most read articles on Bloomberg
The MSCI Asia Pacific index extended its decline to 0.5% in July, its first monthly drop since April. Hong Kong shares led the decline on Tuesday, falling more than 1% as optimism about the Chinese government’s economic stimulus measures faded. Australian and Japanese shares also fell, and U.S. stock futures were also down slightly.
The yen was near a 12-week high ahead of the Bank of Japan’s policy decision on Wednesday. The dollar rose against most major currencies as traders prepared for the Federal Reserve’s policy review on the same day. Treasuries were little changed and on track to rise for a third straight month.
“Market participants are turning to risk aversion this week with big event risks ranging from major central bank meetings to big tech earnings,” said Charu Chanana, strategist at Saxo Capital Markets in Singapore.
Bank of Japan Governor Kazuo Ueda is expected to alarm investors on Wednesday when he unveils detailed plans for quantitative tightening after years of massive monetary easing and could go further with additional interest rate hikes. The bank wants evidence that sustained wage increases will help spur a recovery in consumption and spur demand-led price increases, allowing authorities to further normalize monetary policy.
Chinese government bonds have risen, with 10-year yields hitting record lows, testing the patience of the People’s Bank of China as it walks a tightrope between stimulating growth with an easy monetary policy and containing a potential financial shock from an overheated bond market.
Investors are also closely watching the outcome of a Politburo meeting, likely later this week, for guidance on potential stimulus measures, but sentiment remains bearish after growth-boosting measures this year failed to reverse a slump in the property market and revive sagging consumer demand.
“Investment in China is highly dependent on policy, and there have been no stimulating policies so far, from the Third Plenum to the current Politburo,” said Steven Leung, executive director at UOB Kay Hian Hong Kong. “Investors are not interested in Chinese stocks and are inclined to further reduce their positions.”
The S&P 500 closed slightly higher on Monday. An index of mega-cap stocks known as the “Magnificent Seven” rose 1%. The Russell 2000, a measure of smaller companies, fell 1.1%. Tesla rose after a bullish outlook from Morgan Stanley. McDonald’s investors shrugged off a sales slump as executives promised to roll out new promotions.
U.S. policymakers are widely expected to keep interest rates steady on Wednesday after a year of keeping them at their highest levels in more than two decades, but investors see them signaling a change in policy as soon as September amid growing risks that could jeopardize a strong but slowing jobs market.
July’s stock market volatility made it clear that investing in the seven biggest technology companies is no longer a simple, sure-fire trade. Investors jumped on other parts of the market throughout July on speculation that Fed rate cuts would give U.S. companies a further boost. Still, the S&P 500 ended up losing for a second straight week, dragged down by the most influential group: technology.
In corporate news, BHP Group has partnered with Lundin Mining Corp to acquire Philo Corp, gaining access to copper projects in South America.
Commodity prices have given up all of their gains so far this year as a grim outlook for China, a sell-off in U.S. natural gas and falling food prices combined to drive down raw material prices. Gold prices edged down for a second straight day as the dollar stabilized.
Major events this week:
-
Eurozone economic confidence, GDP, consumer confidence on Tuesday
-
US JOLTS Jobs, Consumer Confidence, Tuesday
-
Microsoft earnings on Tuesday
-
Eurozone Consumer Price Index, Wednesday
-
Bank of Japan policy decision Wednesday
-
US ADP Payroll Change, Wednesday
-
Wednesday’s Fed interest rate decision
-
Metaplatform Earnings Wednesday
-
Eurozone S&P Global Eurozone Manufacturing PMI, Unemployment Rate, Thursday
-
US Initial Jobless Claims, ISM Manufacturing, Thursday
-
Amazon, Apple earnings Thursday
-
Bank of England interest rate decision Thursday
-
U.S. jobs, factory orders on Friday
Some of the key market developments:
stock
-
S&P 500 futures were down 0.2% as of 1:20 p.m. Tokyo time.
-
Nikkei 225 futures (OSE) fell 0.6%
-
Japan’s TOPIX falls 0.8%
-
Australia’s S&P/ASX 200 fell 0.5%
-
Hong Kong’s Hang Seng Index fell 1.2%
-
The Shanghai Composite Index fell 0.5%
-
Euro Stoxx 50 futures little changed
currency
-
The Bloomberg Dollar Spot Index was little changed.
-
The euro was little changed at $1.0825.
-
The Japanese yen was almost unchanged at 154.07 yen to the dollar.
-
The offshore yuan was little changed at 7.2705 per dollar.
Cryptocurrency
-
Bitcoin fell 1.1% to $66,630.95.
-
Ether fell 0.2% to $3,316.07.
Bonds
-
The yield on the 10-year Treasury note was little changed at 4.18%.
-
Japan’s 10-year government bond yield fell 2 basis points to 1.005%.
-
Australian 10-year government bond yields were little changed at 4.28%
merchandise
This story was produced with assistance from Bloomberg Automation.
–With assistance from Jason Scott, John Cheng and Yongchang Chin.
Most read articles on Bloomberg Businessweek
©2024 Bloomberg LP
