Asian stocks falter on global growth concerns Japan fares better

Asian stocks weaken after brutal central bank week – Portal

A passer-by walks past an electric monitor displaying the stock price index of various countries in front of a bank in Tokyo

A passerby walks past an electric monitor displaying the stock price index of various countries in front of a bank in Tokyo, Japan, March 22, 2023. Portal/Issei Kato/File Photo ACKNOWLEDGE RIGHTS

SYDNEY, Sept 25 (Portal) – Asian stocks fell on Monday, buoyed by China, after central banks reiterated the message last week that interest rates would stay higher for longer, as investors prepared for inflation data from the U.S. and Europe.

Markets will be looking for clues as to whether China’s economy is regaining momentum as a week-long national holiday begins on Friday that will be a key test of consumer spending.

The yen hovered near the closely watched level of 150 per dollar on intervention fears after the Bank of Japan made no change to its dovish monetary policy. Governor Kazuo Ueda is expected to deliver a speech and answer questions starting at 2:30 p.m. local time.

MSCI’s broadest index of Asia-Pacific stocks outside Japan (.MIAPJ0000PUS) fell 0.6%, approaching a 10-month low hit just last week. Japan’s Nikkei (.N225), however, rose 0.7%.

Chinese blue chips (.CSI300) fell 0.5% after rising 1.8% on Friday, while Hong Kong’s Hang Seng index (.HSI) fell 1.1%, shedding about half of its gains returned on Friday.

S&P on Monday cut its forecast for China’s economic growth in 2023 to 4.8% from 5.2%, saying fiscal and monetary easing remained limited.

“Policymakers’ focus on containing debt and financial risks has raised the bar for macroeconomic stimulus,” said Louis Kuijs, chief economist for the Asia-Pacific region.

The big test next week would be China’s industrial earnings numbers on Wednesday and manufacturing and services PMIs on Saturday.

BOND ROUT

Bond investors were still affected by the Federal Reserve’s more hawkish interest rate forecasts, which surprised markets. Combined with the recent economic resilience of the US economy, markets increased their bets that interest rates would remain high for longer and sharply reduced expectations of rate cuts.

“Driving this move this year is the acceptance that the inflation shock is not temporary, but will require tight monetary policy for much longer than we initially thought,” said Andrew Lilley, chief interest rate strategist at Barrenjoey.

“For bonds to recover globally, we need a coordinated cycle of interest rate cuts, particularly from the Fed. Personally, I don’t expect the Fed to cut rates in 2024, so I don’t think 2024 will be a particularly good year for bonds either.”

The 10-year Treasury yield edged up 2 basis points to 4.4580% on Monday, after retreating from a 16-year high of 4.508% on Friday.

Two-year yields were little changed at 5.1162%, after falling from a 17-year peak of 5.2020% last week.

A lot will depend on the US data. In a sign of slowing growth, U.S. business activity came to a virtual standstill in September and the huge services sector was at virtually its slowest pace since February.

Bruce Kasman, chief economist at JPMorgan, expects good news from inflation results in the US and Europe this week, which are expected to show low core inflation readings.

The Fed’s preferred inflation gauge, the core personal consumption expenditures price index, is expected to show a monthly increase of 0.2% for August on Thursday, unchanged from July. Other US data this week includes final second-quarter GDP and weekly jobless claims.

Eurozone inflation figures for September are due on Friday.

In foreign exchange markets, the U.S. dollar held near a six-month high of 105.60 against a basket of major currencies.

The yen last traded at 148.41 per dollar, after hitting a new 10-month low of 148.49 earlier in the day.

Oil prices were slightly higher and not far from their 10-month highs. Brent crude futures rose 0.2% to $93.39 a barrel. U.S. West Texas Intermediate crude futures also rose 0.1% to $90.16.

Gold prices fell 0.1% to $1,923.07 an ounce.

Reporting by Stella Qiu; Editing by Sonali Paul and Himani Sarkar

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