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Tag: CSI 300 Index

  • US Equity Futures Tick Higher Before Earnings Test: Markets Wrap

    US Equity Futures Tick Higher Before Earnings Test: Markets Wrap

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    (Bloomberg) — US equity futures started the week on a note of optimism as investors looked ahead to corporate results for further vindication of soft economic landing bets.

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    Contracts on the S&P 500 ticked higher and those on the rates-sensitive Nasdaq 100 rose 0.3%, pointing to extended gains for a rally that propelled the index to a fresh record last week. Oil fell as traders bet that China’s stimulus will fall short of boosting consumption. Cash Treasuries trading is closed Monday for a US holiday.

    A newly accommodative Federal Reserve is providing fresh fodder for bulls — but they’re also fighting against lofty valuations. The S&P 500’s 20% gain through September has been its strongest performance for the first nine months of a year since 1997, according to National Bank of Canada economists including Stefane Marion. That’s pushed earnings-based valuations pushed to rich levels across industries.

    “It remains uncertain whether the market will finish the year as strongly as it began and whether this easing cycle will provide substantial momentum for equities,” the economists wrote in a note to clients. “The current easing cycle is unfolding in an environment of unusually high valuations.”

    Meanwhile, China’s main CSI 300 Index rose about 2% in volatile trading Monday, after capping its worst week since late July as Beijing’s latest efforts to jumpstart growth disappoint those seeking more details on incentives.

    Bitcoin climbed to the highest level in two weeks as investors took disappointment over China as good news for cryptocurrencies that may stand to benefit from China stock outflows.

    Despite promises of more support for the struggling property sector and hinting at greater government borrowing, a briefing by China’s Finance Minister Lan Fo’an on the weekend didn’t produce the headline dollar figure for fresh fiscal stimulus that the markets had sought.

    Corporate scorecards are the next test. Results from Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. are due Tuesday, where the banks will provide an early verdict on the impact of interest rate cuts on their bottom lines. JPMorgan Chase & Co., Wells Fargo & Co and Bank of New York Mellon Corp. all topped estimates Friday.

    In Europe, profits are anticipated to come in lower due to anemic economic growth and a stunted recovery in China, which is likely to drag down luxury goods makers like LVMH.

    In the premarket, MicroStrategy Inc. led gains in cryptocurrency-linked companies. Boeing Co. fell as the beleaguered planemaker plans to cut its global workforce by about 10% and announced $5 billion in charges. SentinelOne Inc. shares rose 4.2% as Piper Sandler upgraded the cybersecurity software company saying current estimates of its market share gains are too low.

    Key events this week:

    • China trade balance, Monday

    • India CPI, Monday

    • UK unemployment rate and average weekly earnings, Tuesday

    • Eurozone industrial production, Tuesday

    • Canada CPI, Tuesday

    • Goldman Sachs, Bank of America, Citigroup earnings, Tuesday

    • Republican presidential candidate Donald Trump will be interviewed by Bloomberg editor-in-chief John Micklethwait at the Economic Club of Chicago, Tuesday

    • New Zealand CPI, Wednesday

    • Thailand, Philippines and Indonesia central bank interest-rate decisions, Wednesday

    • UK CPI, PPI, RPI and house price index, Wednesday

    • ASML, Morgan Stanley earnings, Wednesday

    • Australia unemployment, Thursday

    • Eurozone CPI, ECB rate decision, Thursday

    • US retail sales, jobless claims, industrial production, business inventories, Thursday

    • TSMC, Netflix earnings, Thursday

    • Japan CPI, Friday

    • China GDP, retail sales, industrial production, home prices, Friday

    • UK retail sales, Friday

    Some of the main moves in markets:

    Stocks

    • S&P 500 futures rose 0.2% as of 8:15 a.m. New York time

    • Nasdaq 100 futures rose 0.3%

    • Futures on the Dow Jones Industrial Average fell 0.2%

    • The Stoxx Europe 600 was little changed

    • The MSCI World Index was little changed

    • Shanghai Shenzhen CSI 300 Index rose 1.9%

    Currencies

    • The Bloomberg Dollar Spot Index rose 0.3%

    • The euro fell 0.2% to $1.0914

    • The British pound fell 0.2% to $1.3044

    • The Japanese yen fell 0.4% to 149.74 per dollar

    Cryptocurrencies

    • Bitcoin rose 3.3% to $64,800.93

    • Ether rose 3.4% to $2,543.17

    Bonds

    • The yield on 10-year Treasuries was little changed at 4.10%

    • Germany’s 10-year yield was little changed at 2.27%

    • Britain’s 10-year yield advanced three basis points to 4.24%

    Commodities

    • West Texas Intermediate crude fell 2% to $74.04 a barrel

    • Spot gold fell 0.2% to $2,651.87 an ounce

    This story was produced with the assistance of Bloomberg Automation.

    –With assistance from James Hirai, Sagarika Jaisinghani and Michael Msika.

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    ©2024 Bloomberg L.P.

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  • China Puts Investor Patience to Test as Key Briefing Underwhelms

    China Puts Investor Patience to Test as Key Briefing Underwhelms

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    (Bloomberg) — China’s highly anticipated Finance Ministry briefing on Saturday lacked the firepower that equity investors had hoped for, indicating that the volatility that’s gripped the market following a world-beating rally will likely extend.

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    While Finance Minister Lan Fo’an promised more support for the struggling property sector and hinted at greater government borrowing to shore up the economy, the briefing didn’t produce a headline dollar figure for fresh fiscal stimulus that the markets had sought. A lack of new incentives to boost consumption, which has been a weak link in the economy, is another reason why traders may feel disappointed.

    The ministry “tried its best,” but there is a large gap between what was announced and what the market was expecting, said Shen Meng, a director at Beijing-based boutique investment bank Chanson & Co. “So the overall sentiment for investors is negative.”

    Patience has been wearing thin among investors, who have clamored for Beijing to announce big-bang fiscal measures to help sustain the rally sparked by the stimulus blitz that authorities unleashed in late September. The CSI 300 Index, a benchmark of onshore equities, capped its biggest weekly loss since late July on Friday, with volatility rising ahead of the MOF briefing.

    A further unwinding of the rally risks fueling concern that equities are heading for yet another false dawn, which may bring more selling pressure. The market has been caught in a start-stop cycle of gains and losses a few times before as Beijing’s piecemeal approach to stimulus produced only brief rebounds.

    Local governments will be allowed to issue special bonds to buy unsold homes and turn them into subsidized housing, Lan and his deputies said on Saturday, while refraining from putting a price tag on any additional stimulus. Lan also hinted at room for issuing more sovereign bonds and greater government spending, steps that could be announced later this month or early November.

    Prior to the weekend, investors and analysts surveyed by Bloomberg had expected China to deploy as much as 2 trillion yuan ($283 billion) in fresh fiscal stimulus on Saturday, including potential subsidies, consumption vouchers and financial support for families with children.

    “The room for further fiscal stimulus is still on the table,” said Britney Lam, head of long-short equities for Magellan Investments Holdings Ltd. In the meantime, “markets will likely see further profit taking,” she said.

    Inflation data released on Sunday is likely to add to investor concerns. It showed that China’s consumer prices rose less than forecast in September, while factory-gate charges fell for a 24th straight month, underscoring the need for further policy support to help the economy break out of deflation.

    The CSI 300 Index slid 3.3% last week, but it’s still up 21% from its close on Sept. 23, the day before China’s central bank announced a broad package of measures that included an interest-rate cut and liquidity support for the equity market. In Hong Kong, the Hang Seng China Enterprises Index lost 6.6% last week after surging more than 30% in the previous three weeks.

    While the epic rebound in Chinese shares has spurred the likes of Goldman Sachs Group Inc. and BlackRock Inc. to upgrade the market, it has also drawn skepticism from others such as Invesco Ltd. and Morgan Stanley who say stocks have already run too far too fast.

    What’s Next?

    Investors will soon turn attention to the next major policy briefing in the coming weeks — from the Communist Party-controlled parliament that oversees the budget — for details of more stimulus. At its October meeting last year, the Standing Committee of the National People’s Congress approved additional sovereign debt and raised the budget-deficit ratio.

    Traders will keep waiting for more details after the finance ministry on Saturday used phrases such as “relatively large amount, or relatively large room” to describe the measures, said Frances Cheung, strategist at Oversea-Chinese Banking Corp.

    “On balance, the market is unlikely to get excited,” he said, when asked about how stocks may react on Monday.

    China’s sovereign bonds were little changed on the measures announced on Saturday. By noon on the day, the 10-year yield had erased an earlier drop of as much as two basis points, according to traders, who asked not to be identified as they are not allowed to comment publicly on the rates market.

    A strengthened fiscal push would likely weigh on China’s bonds by encouraging traders to move funds into riskier investments with potentially better returns. An increased supply of debt may also sap liquidity in the financial system, making it harder for the market to absorb the entire amount.

    The yield curve will probably move lower, given debt issuance this year may come below market consensus, said Zhaopeng Xing, a senior strategist at Australia & New Zealand Banking Group. Going forward, “we expect 1 trillion yuan of ultra-long treasury and 1 trillion yuan of local bonds to be announced,” he added.

    –With assistance from Abhishek Vishnoi, Zhu Lin, Wenjin Lv, Shuiyu Jing and April Ma.

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    ©2024 Bloomberg L.P.

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  • Chinese Stocks on Verge of Five-Year Low as Recovery Hopes Fade

    Chinese Stocks on Verge of Five-Year Low as Recovery Hopes Fade

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    (Bloomberg) — Chinese stocks are on the brink of falling to a five-year low seen in February as bearish sentiment grips the market amid a lack of earnings and economic recovery.

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    The CSI 300 Index closed down 1.2% on Monday, taking its slide from this year’s high in May to more than 13%. A further decline would take the benchmark to levels unseen since early 2019, suggesting years of policy efforts to revive the economy and prop up share prices have proved futile. The yuan weakened.

    The market has been stuck in a cycle where stocks would plumb new lows after a brief rebound triggered by short-lived optimism. The government’s piecemeal approach to stimulus has failed to fix a crisis of confidence, with deflationary pressure, anemic consumption and an extended property slump combining to erode hopes of a near-term economic recovery.

    “The ongoing bearishness in Chinese stocks is largely being driven by deteriorating short-term dynamics, particularly the deflationary pressures and signs of weakening consumer demand,” said Billy Leung, an investment strategist at Global X Management in Sydney. “Unless we see a significant policy shift, especially around fiscal support for social welfare or housing, it’s likely this sentiment could persist.”

    The CSI 300 Index rebounded 16% from February through mid-May, as state funds purchased billions of dollars worth of exchange-traded funds and regulators clamped down on short sales and quant trades. Its slide since then is just another example of how policies have failed to address the fundamental ailments that have been hurting sentiment.

    Even long-time China bulls UBS Global Wealth Management, Nomura Holdings Inc., and JPMorgan Chase & Co. have downgraded the country’s equities in recent weeks, citing concerns ranging from a drop in property-led demand to underwhelming stimulus measures and geopolitical tensions ahead of the US elections.

    The equities slump has coincided with a growing consensus among the world’s largest banks that the country would miss its around 5% growth target this year. In the latest blow to sentiment, China’s consumer prices rose less than expected last month, adding to signs policymakers are struggling to get households spending.

    China’s faltering economy has hit global commodity demand as well. Iron ore sank below $90 a ton for the first time since 2022 as industrial commodities faced sustained pressure from tepid Chinese demand. The onshore yuan weakened as much as 0.2% against the dollar on Monday.

    To be sure, some investors say Chinese equities’ ultra-cheap valuations offer good risk-reward opportunity. The MSCI China Index is trading at less than nine times forward price-to-earnings, compared to a ratio of 24 for its emerging market rival India.

    The CSI 300 is near levels seen during the February rout, when exit orders at structured products like snowball derivatives and quantitative funds exacerbated a selloff, and investors rotated into Indian stocks in a major shift in EM portfolios.

    While there are some stock-specific opportunities, “even the long-term Chinese champions are not immune to the persistently weak China economic backdrop with limited visibility of improvement,” said Vivian Lin Thurston, a portfolio manager for William Blair Investment Management in Chicago. “Domestic policy trends and geopolitical risks may continue to pressure the multiples of Chinese equities structurally.”

    Earnings per share for the MSCI China Index fell 4.5% from the year earlier in the second quarter, its worst in five quarters, according to data from Bloomberg Intelligence. Underscoring the contraction was weakening support from the country’s eight biggest tech firms.

    Down nearly 7% this year, the benchmark CSI 300 Index ranks among the world’s worst-performing major gauges and is headed for a record fourth year of losses.

    –With assistance from Winnie Hsu.

    (Updates with prices as of market close.)

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    ©2024 Bloomberg L.P.

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  • U.S. stocks waver in choppy trade, S&P 500 on pace for 5-day losing streak as economic growth worries linger

    U.S. stocks waver in choppy trade, S&P 500 on pace for 5-day losing streak as economic growth worries linger

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    U.S. stock indexes are wavering between small gains and losses on Wall Street Wednesday, struggling to gain ground after a four-day losing streak amid worries about the chances of an economic downturn in coming months.

    How are stock-index futures trading
    • S&P 500
      SPX,
      -0.16%
      dropped 14 points, or 0.3%, to 3,927

    • Dow Jones Industrial Average
      DJIA,
      +0.08%
      shed 70 points, or 0.2%, to 33,528, after rallying over 145 points earlier in the session

    • Nasdaq Composite
      COMP,
      -0.50%
      fell 83 points, or 0.8% to 10,931

    On Tuesday, the Dow Jones Industrial Average fell 351 points, or 1.03%, to 33596, the S&P 500 declined 58 points, or 1.44%, to 3,941, and the Nasdaq Composite dropped 225 points, or 2%, to 11,015.

    What’s driving markets

    A four-day losing streak, during which the S&P 500 index has lost 3.4%, showed little sign of being snapped Wednesday as investors continued to assess the potential economic damage inflicted by high inflation and the Federal Reserve’s campaign to damp it by raising interest rates. U.S. stock indexes extended losses in midday trade despite regaining some ground in the morning session.

    MarketWatch Live: S&P 500 on pace for 5-day losing streak as stocks turn negative heading into midday

    “The recent run of macro data points in the U.S. continues to underscore relatively solid economic trends. And combined with the recent easing in financial conditions, it may trigger a need for the Fed to push back in December. Put another way, the dove camp is feeling some pain,” said Stephen Innes, managing partner at SPI Asset Management.

    Jim Reid, strategist at Deutsche Bank , noted that the S&P 500 had now lost ground in the last seven out of eight sessions. “In fact, the latest moves for the S&P mean it’s now unwound the entirety of the rally following Fed Chair Powell’s [supposedly dovish] speech last week, which makes sense on one level given he didn’t actually say anything particularly new.”

    The S&P 500 has fallen 17.2% in 2022 as the Federal Reserve has driven borrowing costs sharply higher in an effort to tame inflation that has been running at the fastest pace in 40 years.

    See: BNP Paribas studied 100 years of market crashes — here’s what it says is coming next

    The Fed’s monetary tightening alongside stubborn inflation may deliver a marked economic slowdown, senior bankers such as JPMorgan’s Jamie Dimon and Goldman Sachs’s David Solomon warned this week.

    “Fears are growing that economies are in for a rough time ahead as feverish inflation and the bitter interest rate medicine being used to bring it down take effect,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

    “Worries deepened amid warnings from U.S. banking and media sectors that navigating through the storm would not be easy, while the latest data has shown China’s trade has been sideswiped by a drop in global demand and zero-COVID policies. Despite today’s easing of restrictions it’s clear China’s COVID nightmare is not at an end,” Streeter added.

    China on Wednesday announced a series of measures rolling back some of its most draconian anti-COVID-19 restrictions. People who test positive for the virus will be able to isolate at home rather than in overcrowded and unsanitary field hospitals, and schools where there have been no outbreaks must return to in-class teaching, according to the National Health Commission.

    The Hang Seng index
    HSI,
    -3.22%
    in Hong Kong fell 3.2%, while the CSI 300
    000300,
    -0.25%
    dropped 0.2%, suggesting investors had already discounted Beijing’s more relaxed COVID stance.

    See: A speedy reversal of China COVID-19 restrictions could cause 1 million winter deaths: report

    However, long time bull Tom Lee, head of research at Fundstrat, reckons equities will benefit in coming weeks as investors start to get greater clarity on when the Fed may stop tightening policy.

    “We don’t think the end of the inflation war in 2022 is the Fed cutting rates. It is when Fed and markets see sufficient progress in inflation to remove the upside risks to higher rates. We think this could happen as early as the November CPI report. This will be released on 12/13,” Lee wrote in a note.

    “And if November CPI is soft, we think this will support a strong year-end rally. Admittedly, a 10% move between now and [year end] seems a stretch given the S&P 500 is around 4,000 but… the broader point is we see stocks having positive skew given the cautious positioning of investors and the possibility of very favorable incoming inflation reports,” Lee added.

    On the U.S. economic front, nonfarm productivity, which measures hourly output change per worker, rose at a 0.8% annualized rate last quarter, the Labor Department said on Wednesday. Unit labor costs, the price of labor per single unit of output, climbed by a smaller 2.4% annual pace in the third quarter, compared to the preliminary 3.5% increase.

    What companies are in focus

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