Chinese stocks reverse Monday’s gains, baht falls: market has come full circle

(Bloomberg) — It was a dull day for Asian stocks as cuts in mortgage rates failed to lift sentiment, but Chinese stocks fell.

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Interest rates on the mainland and Hong Kong fell in early trading after China cut its prime rate for five-year mortgages by the highest level on record. Japanese stocks rose, but Australian stocks fell.

Chinese stocks’ performance fell short of the optimism seen in the first trade after the Lunar New Year holiday, following a modest rally on Monday. Increased trading volumes in several domestic exchange-traded funds (ETFs) provided a clue that government-backed funds continue to support the market.

Willer Chen, an analyst at Forsyth Barr Asia, said the five-year loan prime rate cut was “a good gesture by commercial banks, but the real estate issue is still not about mortgage rates.” Demand for real estate will increase, but we cannot expect much. ”

After the S&P 500 set a new record last week, global stock indexes are just 1.1% off their all-time highs, while the region-wide Euro Stoxx 50 index remains near a 20-year high. Although spot trading was closed on Monday due to a public holiday, U.S. futures prices were little changed.

The Thai baht fell after Prime Minister Sureta Thavisin called for an unscheduled central bank meeting to cut interest rates. The dollar rose against the Group of Ten (G10) countries.

U.S. Treasury yields rose as trading resumed in Asian time after markets closed on Monday. Australian and New Zealand 10-year bond yields also rose slightly.

In Australia, BHP Group, the world’s largest mining company, reported underlying profits of $6.57 billion, below consensus expectations, and despite a weak housing market, demand from top customer China He said it was healthy.

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In other corporate news, Capital One Financial Corp. has agreed to acquire Discover Financial Services in a $35 billion all-stock deal, creating the largest U.S. credit card company by loan value.

interest rate cut adjustment

Interest rate expectations remain firmly in focus. Swap trades currently price in about 90 basis points (bp) of the Federal Reserve’s rate cut in 2024, up from more than 150 basis points in early February. In Europe, the stake was reduced from 150 basis points to about 100 basis points.

“The market is adjusting to the idea that rate cuts are on the back burner and are probably less important than the initial price,” Vincent Jubins, global market strategist at JPMorgan Asset Management, said on Bloomberg TV. The increase was “driven by the decent revenue growth we saw in the fourth quarter,” he added.

As investors try to gauge the strength of the global economy, Wednesday’s gains from flag-bearer Nvidia could provide fresh impetus to stocks. The semiconductor giant has surpassed Amazon.com Inc.’s market capitalization on hopes that it will be a big winner in the development of artificial intelligence.

Other potential catalysts for markets this week include the Fed’s January meeting minutes to be released on Wednesday and euro zone inflation data to be released on Thursday.

Elsewhere, gold was little changed after rising slightly on Monday to trade around $2,015 an ounce. West Texas Intermediate crude oil prices rose slightly due to continued tensions in the Red Sea, a key trade route.

Some of this week’s main events:

• Reserve Bank of Australia February Meeting Minutes, Tuesday

• China loan prime rate Tuesday

• BHP Group Ltd. Tuesday’s earnings

• The European Central Bank releases an indicator of euro area bargained wage rates on Tuesday

• Rio Tinto Plc earnings, Wednesday

• Eurozone consumer confidence Wednesday

• Nvidia Corp Wednesday’s earnings

• US Federal Reserve Board (FRB) January Meeting Minutes, Wednesday

• Atlanta Fed President Rafael Bostic speaks Wednesday

• Eurozone CPI, PMI, Thursday

• European Central Bank publishes report of January 25 meeting on Thursday

• Fed President Lisa Cook and Minneapolis Fed President Neel Kashkar speak on Thursday

• Chinese real estate prices Friday

• European Central Bank Board Member Isabel Schnabel speaks on Friday

The main movements in the market are:

stock

• S&P 500 futures were down 0.1% as of 10:35 a.m. Tokyo time.

• Nasdaq 100 futures little changed

• Japan’s Topix remains almost unchanged.

• Australia’s S&P/ASX 200 little changed

• Hong Kong’s Hang Seng fell 0.2%.

• The Shanghai Composite fell 0.7%.

• Euro Stoxx50 futures little changed

currency

• Bloomberg Dollar Spot Index little changed

• The euro was almost unchanged at $1.0770.

• The Japanese yen remained almost unchanged at 150.25 yen to the dollar.

• The offshore yuan was almost unchanged at 7.2106 yuan to the dollar.

cryptocurrency

• Bitcoin fell 0.8% to $51,468.91.

• Ether fell 1.8% to $2,915.04.

bond

• The 10-year Treasury yield rose 2 basis points to 4.30%.

• Japan’s 10-year bond yield rose 1 basis point to 0.740%.

• The Australian 10-year bond yield rose 2 basis points to 4.19%.

merchandise

• West Texas Intermediate crude rose 0.3% to $79.45 a barrel.

• Spot gold rose 0.1% to $2,018.87 an ounce.

This article was produced in partnership with Bloomberg Automation.

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