Hong Kong stocks experienced a third consecutive day of decline amid public holidays across various markets in the region, including mainland China. This comes after US shares reached a record high. The Hang Seng China Enterprises Index dropped 1%, recovering from earlier losses of up to 2.5%, while the Hang Seng Index saw a nearly 1% decline. Recent market activity has been marked by volatility, with China taking measures to stabilize its equity market. Both gauges are currently higher for the week, primarily due to a substantial gain on Tuesday fueled by optimism surrounding state support.
According to Steven Leung, Executive Director at UOB Kay Hian Hong Kong Ltd., Hong Kong stocks are falling due to the absence of further positive policies from the mainland and a lack of stock connect inflows. Limited buying interest is observed in Hong Kong, except for recent southbound stock connect activities.
As public holidays affect several markets in the region, including mainland China, Taiwan, South Korea, Indonesia, the Philippines, and Vietnam, trading closed early in Hong Kong and Singapore.
In the US, futures remained largely unchanged, with the S&P 500 closing 0.1% higher, just below 5,000. The Nasdaq 100 rose 0.2%. Analysts, such as Solita Marcelli at UBS Global Wealth Management, project a potential soft landing for the US economy, with the S&P 500 ending the year around current levels. However, economic data suggesting continued strong growth, low inflation, and possible swift monetary easing could propel the S&P 500 to around 5,300 this year.
In Asia, China’s efforts to address a $7 trillion stock market rout are reminiscent of 2015, but investors note that the current challenges are more deeply rooted. Florian Neto, Head of Asia Multi-Asset at Amundi Hong Kong Ltd., emphasizes the need for significant coordinated fiscal easing targeting demand in China to address fundamental economic issues.
While Australian equities remained steady, Japanese stocks rose, supported by a weaker yen. The currency stabilized after a 0.8% decline against the US dollar following comments from a Bank of Japan deputy governor indicating no rush to shift easy policy settings. SoftBank Group Corp. rallied in Japan, while Nissan shares slipped after missing profit estimates.
Treasuries showed little change in Asian trading, and the US government’s sale of $25 billion in 30-year bonds at a lower-than-expected yield indicated healthy demand. The 10-year yield rose three basis points on Thursday, reflecting adjustments in interest rate forecasts based on strong economic data and central bank policymakers’ comments.
Elsewhere, New Zealand yields and the currency climbed following forecasts by ANZ Bank New Zealand Ltd. suggesting that the central bank might raise interest rates twice more this year.
Oil prices rallied amid uncertainties surrounding a potential cease-fire in the Israel-Hamas conflict, while Bitcoin reached a one-month high above $46,000. Analysts anticipate positive returns for Bitcoin following the Lunar New Year, historically experiencing negative returns only twice since 2011.
Key events to watch include US CPI revisions and Germany CPI on Friday, along with President Joe Biden hosting German Chancellor Olaf Scholz at the White House.
Market Snapshot:
- S&P 500 futures: Little changed
- Hang Seng futures: Fell 1.1%
- Nikkei 225 futures: Rose 0.3%
- Australia’s S&P/ASX 200: Rose 0.1%
- Euro Stoxx 50 futures: Fell 0.1%
Currencies:
- Bloomberg Dollar Spot Index: Little changed
- Euro: Little changed at $1.0771
- Japanese Yen: Little changed at 149.39 per dollar
- Offshore Yuan: Little changed at 7.2118 per dollar
Cryptocurrencies:
- Bitcoin: Rose 1.3% to $45,936.01
- Ether: Rose 0.9% to $2,447.79
Bonds:
- Yield on 10-year Treasuries: Little changed at 4.15%
- Australia’s 10-year yield: Advanced one basis point to 4.12%
Commodities:
- West Texas Intermediate crude: Fell 0.1% to $76.14 a barrel
- Spot gold: Little changed
