Article content

(Bloomberg) — Asian stocks are set to fall on Monday ahead of a swath of Chinese data and a vow from the nation’s regulators to stabilize markets. South Korean assets will be closely watched after President Yoon Suk Yeol was impeached. 

Article content

Article content

Australian shares slipped while futures in Hong Kong and mainland China pointed to losses while those in Japan gained. US futures were steady after the S&P 500 swung between gains and losses on Friday ahead of a possible hawkish rate cut by the Federal Reserve later this week. A gauge of dollar strength was flat on Friday, but gained for a second week.

Article content

The moves came as investors readied themselves for the final full week of trading this year with a series of central bank meetings including the Fed, Bank of Japan and Bank of England. Traders may begin to take profit on this year’s almost 20% rally in global stocks, fueled by gains in US tech shares and euphoria over AI.

“The uncertainty this brings may initially result in further position squaring and limit buying activity in risk,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “With developed market equities having already had such a year, throw in some big event risk and things a little funky for traders this week.” 

Chinese stocks are expected to extend a selloff sparked Friday amid disappointment after Beijing pledged to boost consumption but failed to offer details on fiscal stimulus. Regulators at the weekend vowed more efforts to stabilize the property and equity markets, including increased monitoring of futures and spot trading, ahead of economic data set to be released that includes retail sales and industrial production. 

The People’s Bank of China may also keep a cap on the yuan through its daily fixing as the currency faces pressure over the prospect of US tariffs, according to Commonwealth Bank of Australia. 

Article content

Article content

“We expect the PBOC to keep fixing USD/CNY below 7.2000 to offset US dollar strength until there is more clarity on US tariffs,” strategists including Joseph Capurso wrote in a note to clients. 

Elsewhere in Asia, the Bank of Korea pledged to use “all available policy instruments” to stabilize stock and currency markets after Yoon’s impeachment on Saturday over his short-lived attempt to impose martial law. Yoon is suspended from exercising presidential powers, and the constitution requires the prime minister to assume the role of acting president. 

“Political turmoil will likely persist but unlikely to cause an extreme market reaction in USD/KRW and Korea rates,” Societe Generale analysts including Suktae Oh wrote in a note to clients. “All this political turmoil should result in monetary and fiscal stimulus actions in the early part of next year.”

Meanwhile, the world’s biggest bond market sank deeper, with the Treasury 10-year benchmark having its worst week since October, 2023. 

After a series of mixed data last week — including accelerating wholesale inflation and higher-than-expected jobless claims — swaps traders have pared back wagers on the Fed’s easing path. They are now pricing in around three quarter-point rate cuts over the next 12 months. A week ago they had seen better than 50/50 odds of a fourth cut and there may be more pullbacks to come. 

Article content

Elsewhere, French bond futures may react when trading begins later in the Asian day after Moody’s Ratings cut the nation’s credit grade to Aa3 from Aa2, three levels below the maximum rating. France has already been cut to equivalent levels by Fitch and S&P, heaping pressure on the new government to bring a ballooning deficit under control. 

In commodities, oil edged lower, paring Friday’s rise as simmering geopolitical conflicts and the prospect of sanctions on Russia and Iran countered projections for a supply glut next year. Gold was steady. 

Key events this week: 

• Japan Jibun Bank Manufacturing and Services PMI, machinery orders, Monday
• China retail sales, property prices, industrial production, Monday
• India HSBC Manufacturing and Services PMI, wholesale prices, Monday
• Eurozone HCOB Manufacturing and Services PMI, Monday
• ECB President Christine Lagarde speaks, Monday
• UK S&P Global Manufacturing and Services PMI, Monday
• Bank of Canada Governor Tiff Macklem speaks, Monday
• UK jobless claims, unemployment, Tuesday
• Canada CPI, Tuesday
• Indonesia rate decision, Wednesday
• Thailand rate decision, Wednesday
• UK CPI, Wednesday
• Eurozone CPI, Wednesday
• US rate decision, Wednesday
• New Zealand GDP, Thursday
• Japan rate decision, Thursday
• Taiwan rate decision, Thursday
• Philippines rate decision, Thursday
• Sweden rate decision, Thursday
• Norway rate decision, Thursday
• UK BOE rate decision
• US revised GDP, Thursday
• Mexico rate decision, Thursday
• Japan CPI, Friday
• China loan prime rates, Friday
• Eurozone consumer confidence, Friday
• US personal income, spending & PCE inflation, Friday
• Canada retail sales, Friday

Article content

Some of the main moves in markets: 

Stocks

• S&P 500 futures were little changed as of 8:18 a.m. Tokyo time
• Hang Seng futures fell 0.3%
• Australia’s S&P/ASX 200 fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0507
• The Japanese yen rose 0.1% to 153.48 per dollar
• The offshore yuan was little changed at 7.2803 per dollar
• The Australian dollar was little changed at $0.6367

Cryptocurrencies

• Bitcoin rose 1% to $103,903.54
• Ether rose 1.5% to $3,913.9

Bonds

• Australia’s 10-year yield advanced three basis points to 4.32%

Commodities

• West Texas Intermediate crude fell 0.4% to $71.04 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

Article content