Home Finance Chinese Stocks Fall, US Futures Drop on Google: Markets Wrap

Chinese Stocks Fall, US Futures Drop on Google: Markets Wrap

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(Bloomberg) — Chinese stocks fell Wednesday as traders weighed weak economic data from Golden Week and questioned Beijing’s promise for more stimulus.

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The benchmark CSI 300 Index underperformed the region, falling as much as 7.4% before recouping some of its losses after authorities announced a fiscal policy briefing on Saturday. US and European stock futures also fell after a report that the US Department of Justice was considering a Google split. Ten-year government bond yields hovered around the key 4% mark and oil held steady after the steepest decline in more than a year.

Concerns have been growing in China that the latest wave of stimulus may not be enough to convince investors of a sustainable stock market rally. Chinese tourists spent less money during their long vacation, while a news report showed the country needs to implement policies to stabilize growth and expectations. That’s a further sign that Beijing is trying to build confidence among investors.

“To maintain the enthusiasm in markets, much more aggressive gestures for the new fiscal package or the market stabilization mechanism may be needed,” said Homin Lee, senior macro strategist at Lombard Odier. “It is possible that these fluctuations will continue until the meeting of the Standing Committee of the National People’s Congress and also until the US elections in early November.”

The National Development and Reform Commission, China’s economic planning agency, announced that a paltry 200 billion yuan ($28 billion) in spending will be brought forward from next year, after analysts estimated a budget package worth as much as 3 trillion yuan was in the pipeline.

A growing number of strategists and fund managers have expressed skepticism about the rally in recent days, saying Beijing must deliver on its spending promises with real money. Some are also concerned that many stocks have already reached overvalued levels.

“No further policies from the NDRC yesterday disappointed the market,” said Steven Leung, executive director of UOB Kay Hian Hong Kong Ltd. “Volatility is likely to continue in the fourth quarter, but liquidity will come back, wait for the pullback to rise again. especially from those overseas institutions that have been very underweight in greater China.”

In company news, Alimentation sent Couche-Tard Inc. Seven & i Holdings Co. a new potential takeover price of ¥7 trillion ($47.2 billion), showing that the Canadian company is still seeking takeover talks after the original offer was rejected. The Japanese company’s shares rose as much as 12%.

Elsewhere in Asia, dollar and bond yields fell in New Zealand after the country’s central bank cut rates by 50 basis points, while the Reserve Bank of India left rates unchanged. The RBI changed its monetary policy to neutral, sending stocks higher. South Korea will join the FTSE Russell bond index, capping months of official campaigning and an overhaul of financial markets infrastructure.

Expectations about interest rate cuts in the US

Government bonds were little changed in trading in Asia after a series of selling over the previous four sessions, boosted by last week’s US jobs data, which weighed on expectations for rate cuts. With inflation numbers due later this week, investors analyzed comments from Federal Reserve officials.

Fed Bank of Boston President Susan Collins noted that rate cuts should be cautious and data-based. Her colleague Raphael Bostic from Atlanta said that while risks to inflation have declined, threats to the labor market have increased even as the economy remains strong. Governor Adriana Kugler said officials must continue to focus on reducing inflation, with a “balanced approach” that avoids a slowdown in employment.

“The US data is not so strong that the Fed’s contribution to the global rate-cutting cycle appears to be coming to an end,” said Mark Haefele of UBS Global Wealth Management. “We remain convinced that investors should position themselves for lower interest rates.”

Main events this week:

  • Fed minutes, Wednesday

  • The Fed’s Lorie Logan, Raphael Bostic, Austan Goolsbee and Mary Daly will speak Wednesday

  • US CPI, initial unemployment claims, Thursday

  • John Williams and Thomas Barkin of the Fed will speak on Thursday

  • JPMorgan and Wells Fargo kick off earnings season for the major Wall Street banks on Friday

  • U.S. PPI, University of Michigan Consumer Confidence, Friday

  • The Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman will speak Friday

Some of the major moves in the markets:

Stocks

  • S&P 500 futures fell 0.2% at 6:51 a.m. London time

  • Japan’s Topix rose 0.4%

  • Hong Kong’s Hang Seng rose 0.7%

  • The Shanghai Composite fell 3.5%

  • Euro Stoxx 50 futures were little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0971

  • The Japanese yen fell 0.2% to 148.52 per dollar

  • The offshore yuan rose 0.2% to 7.0601 per dollar

  • The Australian dollar was little changed at $0.6748

Cryptocurrencies

  • Bitcoin rose 0.2% to $62,462.73

  • Ether rose 0.3% to $2,448.42

Bonds

  • The yield on ten-year government bonds rose by one basis point to 4.02%

  • The Japanese ten-year yield rose by one basis point to 0.930%

  • The Australian ten-year yield rose by three basis points to 4.19%

Raw materials

This story was produced with the help of Bloomberg Automation.

Most read from Bloomberg Businessweek

©2024 BloombergLP

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