(Bloomberg) — Stocks in Asia were dragged down by losses in Hong Kong and China amid concern over tighter regulation on the gaming industry and fears the Chinese government’s efforts to bolster the economy are insufficient.
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The Hang Seng Tech Index slid as much as 3.5%, putting it on course for the lowest close since November 2022. The three biggest drags on the MSCI Asia Pacific Index were Tencent Holdings Ltd., Alibaba Group Holdings Ltd. and Meituan, all Chinese tech firms. Benchmark stock indexes also fell in South Korea and Australia.
Investor sentiment remains quite negative in China despite a rally in global stocks during the past two months of 2023, Nomura Group analysts including Chetan Seth in Singapore wrote in a client note. “In China, there have been more signs of support for the economy, but equity investors still do not appear convinced,” they said.
European equity futures also edged lower before euro-zone retail sales and consumer confidence data that may give a better guide on the region’s economic recovery.
US equity futures were little changed after the S&P 500 closed marginally higher Friday after payroll growth beat expectations but the service sector slowed. Japanese financial markets were shut Monday for a holiday.
The dollar edged higher versus most of its Group-of-10 peers, while the yen strengthened ahead of Tokyo inflation data due Tuesday. Treasury 10-year futures dropped. There’s no trading of cash Treasuries in Asia due to the Japanese holiday.
Rate-Cut Bets
Global stocks slid the most since October last week as markets were rattled by a deluge of corporate issuance and the Federal Reserve indicated it was in no rush to cut interest rates.
Still, markets are pricing in rate cuts by March and traders are now looking to the US inflation print due Thursday for the next major guide for the Fed outlook. The inflation data is expected to see the underlying measure ease further to 3.8% year-on-year in December from 4% in the month prior, according to a Bloomberg survey.
For some investors, the rate-cut expectations have gone too far.
“Even if US inflation conveniently falls back to target in H1-2024, it is hard to imagine the FOMC cutting much more aggressively than 150bps if the US economy avoids recession,” Eric Robertsen, global head of research and chief strategist at Standard Chartered Bank, wrote in a note. “The FOMC is unlikely to deliver on these market expectations, and we feel that short-end rate pricing is due for a correction.”
Elsewhere, Boeing Co. shares will be in focus when Wall Street opens as groundings of the 737 Max 9 aircraft gathered pace globally after a fuselage section on a brand-new Alaska Airlines jet blew out during flight.
In commodities, oil dropped after Saudi Arabia cut official selling prices for all regions, underscoring a worsening outlook and outweighing concern over Red Sea tensions and supply disruptions in Libya.
Key events this week:
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Eurozone economic confidence, retail sales, consumer confidence, Monday
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Atlanta Fed President Raphael Bostic speaks, Monday
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US House returns from recess, Monday
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Australia retail sales, Tuesday
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Japan Tokyo CPI, household spending, Tuesday
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Eurozone unemployment, Tuesday
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World Economic Forum’s global risks report released, Wednesday
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US wholesale inventories, Wednesday
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Deadline for US Securities & Exchange Commission to vote on Bitcoin ETF applications, Wednesday
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New York Fed President John Williams speaks, Wednesday
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US CPI, initial jobless claims, Thursday
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China CPI, PPI, trade, Friday
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France CPI, Friday
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UK industrial production, Friday
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US PPI, Friday
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Bank of America, Bank of New York Mellon, BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report fourth-quarter results, Friday
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Minneapolis Fed President Neel Kashkari speaks, Friday
Stocks
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S&P 500 futures were little changed as of 6:30 a.m. London time. The S&P 500 rose 0.2% on Friday
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Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.1%
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Euro Stoxx 50 futures fell 0.2%
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Hong Kong’s Hang Seng Index fell 2%
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China’s Shanghai Composite Index fell 1%
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Australia’s S&P/ASX 200 Index fell 0.5%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was unchanged at $1.0943
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The Japanese yen rose 0.3% to 144.20 per dollar
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The offshore yuan was little changed at 7.1668 per dollar
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The Australian dollar was little changed at $0.6707
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The British pound was little changed at $1.2712
Cryptocurrencies
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Bitcoin fell 0.2% to $44,164.12
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Ether fell 0.8% to $2,223.26
Bonds
Commodities
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West Texas Intermediate crude fell 1.5% to $72.72 a barrel
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Spot gold fell 0.7% to $2,031.54 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
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