A woman walks past a screen displaying the Hang Seng Index in the Central District in Hong Kong, China, March 21, 2023. Portal/Tyrone Siu/File Photo Acquire Rights
- Asian stock markets:
- Fed rate decision on Wednesday, BOE on Thursday, BOJ on Friday
- Oil near 10-month highs, dollar booming
- China Evergrande falls 20%
SYDNEY, Sept 18 (Portal) – Asian stocks fell and the dollar remained steady on Monday as investors looked ahead to a week of central bank meetings, including the Federal Reserve and the Bank of Japan under scrutiny over global monetary policy be taken outlook.
S&P 500 futures rose 0.2%, while Nasdaq futures rose 0.1%.
MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.5%, while Australia’s resource-intensive stock market (.AXJO) fell 0.7% and Hong Kong’s Hang Seng Index (.HSI) fell 0.7%.
Japan’s Nikkei (.N225) is closed for a holiday.
The focus of the Asian morning was on Hong Kong-listed Chinese real estate developers (.HSMPI), which fell 2%, partly driven by a 20% slump by China Evergrande Group (3333.HK) after police in southern China Arresting some employees of its asset management unit was the latest problem to hit the struggling real estate company.
Chinese trust company Zhongrong International Trust Co, which has contacts with Chinese real estate developers, also said over the weekend that it had been unable to make payments on some trust products on time.
Sentiment in Asia had improved last week after news of more policy support from Beijing and better-than-expected Chinese data added to signs that the world’s second-largest economy may be beginning to stabilize after a months-long slowdown.
“Despite encouraging signs of stabilization, the real estate market remains the missing piece of the economic picture,” said Tommy Xie, head of Greater China Research at OCBC Bank.
“Local feedback suggests an increase in property viewing activity; However, most potential buyers are in no hurry to conclude deals as the supply of apartments is increasing post relaxation.”
Global central banks will be in focus this week, with five of the central banks overseeing the 10 most heavily traded currencies – including the US Federal Reserve – holding interest rate-setting meetings, as well as a series of emerging market meetings.
Markets have fully priced in a Fed pause on Wednesday, so the focus will be on the updated economic and interest rate forecasts, as well as what Chairman Jerome Powell has to say about the future. You’re looking at cuts of about 80 basis points next year.
“In theory, the FOMC meeting should be a low-volatility affair, but it is a risk that needs to be managed,” said Chris Weston, head of research at Pepperstone.
“We should expect the median policy rate forecast to remain at 5.6% in 2023, giving the bank the flexibility to raise again in November if the data warrants.”
Weston added that a Fed raising its 2024 interest rate forecasts would result in rate cuts being priced out, leading to renewed interest in the U.S. dollar and downward pressure on global stocks.
On Thursday, the Bank of England is expected to hike interest rates for the 15th time, raising base rates to 5.5%, while Sweden’s Riksbank is expected to hike 25 basis points to 4%.
The Bank of Japan is the main risk event on Friday. Markets are looking for signs that the BOJ could move away from its ultra-loose policies sooner than previously thought after recent comments from Gov. Kazuo Ueda sent yields sharply higher.
Last Friday, Wall Street closed sharply in the red as labor action in the US weighed on auto stocks. Rising Treasury yields also put pressure on Amazon (AMZN.O) and other megacap growth companies.
With Tokyo closed, no cash government bonds were traded in Asia. Treasury yields rose slightly on Friday, with the two-year Treasury note above the 5% threshold, as futures priced in higher interest rates for an extended period ahead of the Fed’s policy meeting this week.
In foreign exchange markets, the US dollar remained strong near its six-month high of 105.29 against a basket of major currencies.
The euro recovered 0.1% to $1.0673 in early Asian trading, after falling to a three-and-a-half-month low of $1.0629 last week as the European Central Bank signaled its rate hikes may be over.
Oil prices rose after hitting a 10-month high last Friday, adding to inflationary pressures. Brent crude futures rose 0.3% to $94.20 a barrel and U.S. West Texas Intermediate crude futures rose 0.4% to $91.14.
Gold prices rose 0.2% to $1,925.62 an ounce.
Reporting by Stella Qiu; Edited by Lincoln Feast and Shri Navaratnam
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