Stocks across Asia witnessed declines influenced by weak oil prices and apprehensions regarding China’s fiscal health, following the footsteps of a third consecutive daily drop for the S&P 500. The markets from Hong Kong to mainland China and Australia experienced downward trends, with US futures maintaining relative stability.
Treasury yields for the 10-year drifted higher after a recent decline, reaching 4.1%, the lowest since August. The two-year yield saw a slight increase, while Australian bond yields showed a minor decrease.
The energy sector faced setbacks due to declining oil prices, reaching the lowest point since June, coupled with concerns about China’s debt burden. Moody’s Investors Service downgraded its outlook on several local companies, contributing to the negative sentiment.
Surprising contraction in China’s imports for November added to investor worries, offsetting the positive note of a 0.5% rise in exports. Analysts expressed uncertainty about exports sustaining as a growth pillar in the coming year, given cooling economies in Europe and the US.
All eyes are now on Friday’s US jobs report after private payrolls fell short of estimates, signaling softening in the employment market.
Oil prices stabilized following a five-day loss streak, despite OPEC+ plans to curb production into 2024. However, concerns about global supplies surpassing demand persisted.
The US dollar index steadied after reaching a three-week high, while currencies saw minimal movement during Asian trading hours.
As the Federal Reserve prepares for its final meeting of 2023, attention is on the quarterly forecasts, which may impact market expectations. The Bank of England issued warnings about hedge funds shorting US Treasury futures, with the net short position growing to $800 billion.
In corporate news, Apple Inc. aims to reverse declining Mac and iPad sales with upcoming models and upgrades in early 2024. Advanced Micro Devices Inc. challenges Nvidia Corp.’s dominance in the artificial intelligence market with new accelerator chips.
Gold extended gains from the previous day, while Bitcoin traded just below $44,000, a level not seen since June 2022.
Key Events This Week:
- Eurozone GDP (Thursday)
- Germany industrial production (Thursday)
- US wholesale inventories, initial jobless claims (Thursday)
- Germany CPI (Friday)
- Japan household spending, GDP (Friday)
- Reserve Bank of Australia’s head of financial stability Andrea Brischetto speaks (Friday)
- US jobs report, University of Michigan consumer sentiment (Friday)
Notable Market Moves:
- S&P 500 futures were largely unchanged
- Nikkei 225 futures fell 1.9%
- Japan’s Topix fell 1.3%
- Australia’s S&P/ASX 200 fell 0.4%
- Hong Kong’s Hang Seng fell 1.5%
- The Shanghai Composite fell 0.3%
Currencies:
- The Bloomberg Dollar Spot Index remained stable
- The euro showed minimal change at $1.0762
- The Japanese yen rose 0.3% to 146.80 per dollar
- Bitcoin rose 0.3% to $43,957.18
Bonds:
- The yield on 10-year Treasuries advanced three basis points to 4.13%
- Japan’s 10-year yield advanced 5.5 basis points to 0.700%
- Australia’s 10-year yield declined two basis points to 4.26%
Commodities:
- West Texas Intermediate crude rose 0.6% to $69.78 a barrel
- Spot gold remained stable
