(Bloomberg) — Asian stocks were mixed on Thursday, with China leading the decline after strong U.S. retail sales data raised new doubts about the possibility of a March interest rate cut from the U.S. Federal Reserve. expanded.
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Stock prices in mainland China fell, with the Shanghai Composite Index falling below 2,800, its lowest since 2020. The selloff in the world’s second-largest economy followed an underwhelming economic report and signs from Premier Li Qiang that authorities would avoid large-scale stimulus measures to revive growth. Ta.
Australian stocks fell, but Japanese and South Korean stocks rose. U.S. futures traded in a narrow range after the S&P 500 and Nasdaq 100 both fell 0.6% on Wednesday.
Jun Rong Yep, market strategist at IG Asia, said in a note that investors continue to shy away from Chinese stocks. “Despite a series of stimulus measures, China’s economic indicators reveal a difficult growth environment,” he added.
Global stocks have fallen 2% this year due to a weak outlook for China and an expected repricing of the Fed’s interest rate cuts. The recent depreciation of the yen against the backdrop of a strong dollar has pushed the Japanese currency within reach of 150 yen to the dollar.
U.S. Treasuries firmed up after further selling focused on the short end of the curve on Wednesday. The policy-sensitive two-year bond yield rose 14 basis points (bps), the biggest single-day rise since June. The 10-year rose 4 basis points to exceed 4.1% for the first time in more than a month. Yields in Australia and New Zealand also rose slightly on Thursday.
The dollar pared back most of the gains it posted against the Group of Ten (G10) countries on Wednesday, after the dollar index rose to a one-month high in the previous session. Elsewhere, the Australian dollar was little changed after a report showed domestic employment was unexpectedly weak in December.
Jason Draho of UBS Global Wealth Management says this is unlikely to be a smooth road for the market.
“Investors will debate the type of soft landing, the stage of the cycle, and the macro regime, but the wide dispersion of views can change rapidly based on new data,” Draho said. “That could lead to a quick and dramatic reorientation of market prices as the consensus view changes.”
The decline in bond prices reflected a change in investors’ expectations for a Fed rate cut in March. Based on swap pricing, the probability of a rate cut on Wednesday fell below 60% for the first time since mid-December. That’s down from 80% on Friday.
The decline followed statements from Fed officials this week that contradicted market expectations about an impending rate cut and Wednesday’s better-than-expected retail sales data. Strong consumer spending in recent weeks helped boost the economy, the Fed said in its Beige Book survey.
The sell-off was also felt in Europe, where the region’s euro Stoxx50 index fell 1% on Wednesday as investors digested comments from the European Central Bank chief that a rate cut was likely in mid-year. A fall in British bonds after data showed inflation was accelerating also prompted traders to reduce bets on Bank of England easing.
Elsewhere in corporate news, Boeing Co.’s 737 Max 9 operator has reportedly completed inspections of an initial batch of 40 aircraft, a key step in finally ending the aircraft’s grounding. There is. Meanwhile, Apple has suffered another legal setback over a patent dispute, forcing it to stop selling its Series 9 and Ultra 2 smartwatches with blood oxygen functionality in the United States.
Gold was little changed after falling more than 1% on Wednesday. West Texas Intermediate rose towards $73 per barrel early Thursday.
This week’s main events:
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U.S. housing starts, new unemployment insurance claims, Thursday
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Republican presidential primary debate Thursday in New Hampshire
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ECB President Christine Lagarde participates in panel discussion in Davos on Thursday
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ECB releases report of December policy meeting on Thursday
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Atlanta Fed President Rafael Bostic speaks Thursday
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Canadian retail sales Friday
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Japanese CPI, tertiary index, Friday
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U.S. existing home sales, University of Michigan consumer sentiment, Friday
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ECB President Christine Lagarde and IMF Managing Director Kristalina Georgieva will speak in Davos on Friday.
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San Francisco Fed President Mary Daley speaks on Friday
The main movements in the market are:
stock
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S&P 500 futures were little changed as of 11:43 a.m. Tokyo time.
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Nasdaq 100 futures little changed
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Japan’s TOPIX rose 0.2%
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Australia’s S&P/ASX 200 falls 0.4%
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Hong Kong’s Hang Seng rose 0.3%.
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The Shanghai Composite fell 1.6%.
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Euro Stoxx50 futures unchanged
currency
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The Bloomberg Dollar Spot Index fell 0.1%.
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The euro rose 0.1% to $1.0897.
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The Japanese yen was almost unchanged at 148.04 yen to the dollar.
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The offshore yuan was almost unchanged at 7.2169 yuan to the dollar.
cryptocurrency
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Bitcoin remains almost unchanged at $42,647.85
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Ether remains almost unchanged at $2,526.37
bond
merchandise
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West Texas Intermediate crude rose 0.3% to $72.77 per barrel.
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Spot gold rose 0.1% to $2,008.96 an ounce.
This article was produced in partnership with Bloomberg Automation.
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