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(Bloomberg) — Asian stocks edged lower on Monday as investors looked ahead to U.S. inflation data due Tuesday that is expected to show a further slowdown in core prices.
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Australian and Japanese stocks both fell more than 1%, but Hong Kong futures edged higher. US stock contracts fell in Asian trading, and in the US, both the S&P 500 and Nasdaq 100 fell, extending the economic downturn into the end of the week.
Hong Kong stock futures were buoyed by positive signs for China’s economy over the weekend, when authorities reported consumer prices rising for the first time since August. The 0.7% rise in the CPI in February beat consensus expectations and is welcome news for investors worried about deflation in the world’s second-largest economy.
Japan’s economic growth expanded in the fourth quarter, confirming expectations that the Bank of Japan will raise interest rates for the first time since 2007 this month. The decline in Japanese stocks partly reflects the strong yen, which is usually a headwind for Japanese stocks.
The dollar rose against the greenback in early trading on Monday, extending last week’s 2% gain against the greenback and giving it its best weekly gain since July. Yields on Japanese government bonds rose following reports that the Bank of Japan is considering abolishing its yield curve control program.
“Japan is probably finally coming out of this deflationary spiral, which could have a significant impact on Japanese assets,” said Paresh Upadhyaya, director of fixed income and currency strategies at Amundi Asset Management. He explained that the money would be used to support the yen through remittances. Flow, mostly towards stocks.
Tuesday’s U.S. Consumer Price Index figures will dominate this week’s economic data. The core price index in February is expected to rise 0.3% month-on-month and 3.7% year-on-year, which would be the smallest annual increase since April 2021.
Further restraint in U.S. prices would support the disinflation narrative, which has largely held in place despite a reduction in the number of Federal Reserve rate cuts expected this year. Based on swap pricing, three rate cuts are expected in 2024, down from six at the beginning of the year.
U.S. jobs data released last week did little to change that outlook. Despite the higher-than-expected increase in new jobs, the unemployment rate was at its highest level in two years. Mixed signals point to a gradual cooling of the labor market, supporting expectations for a soft landing for the US economy for now.
E*Trade’s Chris Larkin said the jobs report “wasn’t necessarily a ‘perfect’ signal for the Fed, but it also doesn’t seem to derail its rate cut plans.” From Morgan Stanley.
Yields in Australia and New Zealand were almost flat on Monday, reflecting solid trading in US Treasuries in early Asian markets. The dollar index fell slightly after falling 1% last week, its worst weekly reading since December.
Friday’s pullback in U.S. stocks reflected declines in most of the so-called Magnificent Seven stocks that drove U.S. markets to record highs this year. Nvidia, whose market value increased by about $1 trillion in 2024 alone, fell 5.6%.
In commodities, crude oil posted losses on Monday ahead of reports from the Organization of the Petroleum Exporting Countries (OPEC) and the IEA this week that could provide clues about the outlook for demand. Gold ended Friday up nearly 1%, and Bitcoin traded around $69,000, continuing its gains over the past few weeks.
This week’s main events:
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Tuesday’s CPI report for Argentina, Brazil, Germany, India, and the United States
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UK unemployment insurance claims, unemployment rate, Tuesday
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Japan PPI, Tuesday
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Indian industrial production Tuesday
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Mexico’s international reserves, industrial production, Tuesday
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philippine trade tuesday
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Türkiye’s industrial production, current account balance, Tuesday
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EU finance ministers meet in Brussels on Tuesday
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ECB Executive Board member Robert Holzmann speaks on Tuesday
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Eurozone, UK industrial production, Wednesday
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indian trade wednesday
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South Korea’s unemployment rate, Wednesday
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ECB Executive Board member Giannis Stournaras speaks on Wednesday
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First Deputy Governor and Deputy Governor of the Riksbank speak on Wednesday
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Saudi Arabia, Spanish CPI, Thursday
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US PPI, Retail Sales, New Unemployment Insurance Claims, Business Inventories, Thursday
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Australian Finance Minister Jim Chalmers delivers pre-Budget speech on Thursday
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Canadian housing starts Friday
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Chinese real estate prices Friday
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France, Italy, Poland CPI, Friday
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Indonesia trade, Friday
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Japan tertiary index, Friday
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New Zealand PMI, Friday
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Philippine overseas remittance, Friday
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Sri Lanka GDP
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US Industrial Production, University of Michigan Consumer Sentiment, Empire Manufacturing, Friday
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Japan’s largest federation of labor unions announces results of annual wage negotiations on Friday
The main movements in the market are:
stock
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S&P500 futures were little changed as of 9 a.m. Tokyo time.
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Hang Seng futures rose 0.2%.
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Japan’s TOPIX fell 1.1%
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Australia’s S&P/ASX 200 falls 1.1%
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Euro Stoxx50 futures fall 0.3%
currency
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Bloomberg Dollar Spot Index little changed
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The euro was almost unchanged at $1.0942.
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The Japanese yen rose 0.2% to 146.82 yen to the dollar.
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The offshore yuan was almost unchanged at 7.1993 yuan to the dollar.
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The Australian dollar was unchanged at US$0.6624.
cryptocurrency
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Bitcoin fell 0.6% to $68,988.85.
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Ether fell 0.7% to $3,879.4.
bond
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The 10-year government bond yield was almost unchanged at 4.08%.
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Japan’s 10-year bond yield rose 2.5 basis points to 0.755%.
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Australian 10-year bond yield unchanged at 3.98%
merchandise
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West Texas Intermediate crude oil fell 0.3% to $77.81 a barrel.
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Spot gold rose 0.1% to $2,181.42 an ounce.
This article was produced in partnership with Bloomberg Automation.
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