(Bloomberg) — Asian stocks fell as earlier optimism sparked by strong Chinese holiday data faded.
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Stock prices in the Asia-Pacific region fell after rising 0.4% in early trading as gains in mainland Chinese stocks narrowed, with the CSI300 index falling on declines in financial and healthcare stocks. Chinese stocks in Hong Kong also fell. Strong travel and tourism data released earlier during the Lunar New Year holiday suggested that consumption was picking up even as the economy as a whole struggled with deflation and the real estate crisis.
Shen Meng, director at Chanson & Company in Beijing, said: “Although the overall trend remains up, the volatility at the open is slow as traders have time to digest the rapid-fire news from the holiday.'' “This suggests that there is a need, and the trend may become clearer later in the day.”
However, a sub-gauge measuring Chinese consumer stocks held steady as traders looked for further policy support across monetary and fiscal sectors on top of the already implemented reserve requirement cuts.
Japan's Tokyo stock index was almost flat, but the Nikkei stock average fell, and shares in gaming company Nintendo fell as much as 8.8% after the company announced it would postpone the release of its Switch successor to early next year. . . Still, the Nikkei Stock Average remained close to its 1989 closing price record. Australian shares rose after the S&P 500 index fell 0.5% on Friday, while contracts for US stocks also rose.
There were no cash transactions in U.S. Treasuries during the holiday. Interest rates fell on Friday, with the yield on the two-year note rising 7 basis points to 4.65% as a sharp rise in service costs pushed up the producer price index.
The yen appreciated by about 150 yen to the dollar, and the dollar weakened against all 10 member countries of the G10. The yuan was little changed on Sunday after the People's Bank of China kept its one-year policy lending rate unchanged at 2.5% while injecting small amounts of cash into the financial system.
Oil fell but remained near year-to-date highs as continued tensions in the Middle East added a risk premium to the market. Gold rose for the second day in a row.
Elsewhere, US and global stocks have yet to react to this month's decline in US Treasuries. A series of better-than-expected economic data has led traders to back off their once-aggressive bets on interest rate cuts, and expectations are now much lower. That's close to the Fed's own forecast of 75 basis points for this year. The swap is pricing in a rate cut of about 90 basis points in 2024, up from more than 150 basis points in early February.
Goldman Sachs expects U.S. stock gains to continue, with the S&P 500 reaching 5,200 by year-end, as the U.S. economy's resilience drives corporate profit growth, strategists led by David Kostin say. I wrote in a note to the customer. The new target suggests a 3.9% rise from Friday's close.
UBS Group's wealth management division also has a positive view on small-cap stocks, saying that once the Federal Reserve starts cutting interest rates, stocks, especially consumer spending, should remain healthy given the strength of the labor market.
“Despite all the comments from government officials, a Fed rate cut is likely not far away,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management. “While we do not expect the path to lower inflation and interest rates to be smooth, we maintain our view that a soft landing for the U.S. economy favors high-quality bonds and stocks,” she said.
This week, traders will focus on European inflation data and earnings from Nvidia, mining giants BHP Group and Rio Tinto to gauge the health of the global economy. Meanwhile, Qatar's foreign minister said that negotiations aimed at securing a ceasefire and the release of hostages between Israel and Hamas have not proceeded as expected, and the conflict in the Middle East is expected to drag on.
Some of this week's main events:
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Reserve Bank of Australia February Meeting Minutes, Tuesday
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China loan prime rate Tuesday
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BHP Group Ltd. Tuesday's earnings
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The European Central Bank releases an indicator of euro area bargained wage rates on Tuesday
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Rio Tinto Plc earnings, Wednesday
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Eurozone consumer confidence Wednesday
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Nvidia Corp Wednesday's earnings
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US Federal Reserve Board (FRB) January Meeting Minutes, Wednesday
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Atlanta Fed President Rafael Bostic speaks Wednesday
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Eurozone CPI, PMI, Thursday
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European Central Bank publishes report of January 25 meeting on Thursday
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Fed President Lisa Cook and Minneapolis Fed President Neel Kashkar speak on Thursday
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Chinese real estate prices Friday
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European Central Bank Board Member Isabel Schnabel speaks on Friday
The main movements in the market are:
stock
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As of 10:49 a.m. Tokyo time, S&P 500 futures were almost unchanged. The S&P 500 fell 0.5% on Friday.
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Nasdaq 100 futures rose 0.2%.Nasdaq 100 fell 0.9%
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Japan's Topix index has little change
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Hong Kong's Hang Seng Index fell 0.8%.
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China's Shanghai Composite Index rose 0.7%.
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Australia's S&P/ASX 200 rose 0.1%
currency
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Bloomberg Dollar Spot Index little changed
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The euro was almost unchanged at $1.0782.
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The Japanese yen rose 0.2% to 149.94 yen to the dollar.
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The offshore yuan remained almost unchanged at 7.2099 yuan to the dollar.
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The Australian dollar rose 0.2% to $0.6542.
cryptocurrency
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Bitcoin rose 0.3% to $52,031.31
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Ether rose 0.6% to $2,865.73
bond
merchandise
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West Texas Intermediate crude oil fell 0.4% to $78.85 a barrel.
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Spot gold rose 0.3% to $2,019.40 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Matthew Burgess and Zhu Lin.
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