Asian stocks faced a downward trend fueled by a share selloff in China and Hong Kong, with concerns over tighter regulation in the gaming industry and doubts about the Chinese government’s economic support measures. The Hang Seng Tech Index witnessed a decline of up to 3.5%, set to close at its lowest since November 2022. Leading the losses on the MSCI Asia Pacific Index were prominent Chinese tech firms Tencent Holdings Ltd., Alibaba Group Holdings Ltd., and Meituan, contributing to benchmark stock index declines in South Korea and Australia.
Despite a global stocks rally in the past two months of 2023, investor sentiment in China remains notably negative, as highlighted by Nomura Group analysts. They noted that although there have been signs of economic support, Chinese equity investors remain unconvinced.
European equity futures also saw a dip ahead of euro-zone retail sales and consumer confidence data, crucial indicators for gauging the region’s economic recovery.
In the United States, equity futures showed minimal change following a marginally higher close for the S&P 500 on Friday, influenced by stronger-than-expected payroll growth but a slowdown in the service sector. Japanese financial markets were closed on Monday for a holiday.
The dollar edged higher against most of its Group-of-10 peers, while the yen strengthened ahead of Tokyo inflation data scheduled for Tuesday. Treasury 10-year futures experienced a drop, and with no trading of cash Treasuries in Asia due to the Japanese holiday.
Global stocks witnessed their most significant decline since October last week, impacted by a surge in corporate issuance and the Federal Reserve’s indication that it is not rushing to cut interest rates. Despite this, markets are pricing in rate cuts by March, with attention turning to the US inflation print on Thursday as a crucial guide for the Fed outlook.
Boeing Co. shares will be closely monitored on Wall Street as groundings of the 737 Max 9 aircraft escalate globally, following an incident where a fuselage section on a new Alaska Airlines jet blew out during flight.
In the commodities market, oil prices dropped after Saudi Arabia reduced official selling prices for all regions, overshadowing concerns about Red Sea tensions and supply disruptions in Libya.
Key events scheduled for the week include eurozone economic confidence, retail sales, and consumer confidence on Monday, US CPI and initial jobless claims on Thursday, and China’s CPI, PPI, and trade data on Friday.
Market Snapshot:
- S&P 500 futures remained unchanged, Nasdaq 100 futures showed little change, Euro Stoxx 50 futures fell 0.2%, Hong Kong’s Hang Seng Index fell 2%, and China’s Shanghai Composite Index fell 1%. Australia’s S&P/ASX 200 Index fell 0.5%.
Currencies:
- The Bloomberg Dollar Spot Index saw minimal change, the euro remained unchanged at $1.0943, the Japanese yen rose 0.3% to 144.20 per dollar, the offshore yuan showed little change at 7.1668 per dollar, the Australian dollar remained stable at $0.6707, and the British pound saw little change at $1.2712.
Cryptocurrencies:
- Bitcoin fell 0.2% to $44,164.12, and Ether fell 0.8% to $2,223.26.
Bonds:
- Australia’s 10-year yield advanced two basis points to 4.16%.
Commodities:
- West Texas Intermediate crude fell 1.5% to $72.72 a barrel, and spot gold fell 0.7% to $2,031.54 an ounce.
