Asian markets were mostly lower on Tuesday after the release of data showing more signs of weakness in China’s manufacturing and real estate sectors.
U.S. futures were higher and oil prices gained more than $1 a barrel. Japanese markets were closed for a public holiday.
Hong Kong’s Hang Seng Index fell 1.5% to 16,788.55 and the Shanghai Composite Index fell 0.4% to 2,962.28.
Investors were selling real estate developers like debt-heavy China Evergrande, down 6%, and LongFor Group Holding, which lost 6.9%. Sino-Ocean Holding fell 4.6%.
The December survey of China’s official purchasing managers’ index, or PMI, fell to 49 for the third consecutive monthsignaling weak demand and highlighting difficult economic conditions in the world’s second-largest economy.
This contrasts with the private sector survey, carried out by financial publication Caixin, which recorded a slight improvement in the manufacturing PMI to 50.8, driven by an increase in production and new orders. However, it showed that business confidence for 2024 remained subdued.
The latest data also showed that the value of new home sales by China’s 100 largest developers fell almost 35% from a year earlier in December, despite moves by regulators to lift limits on these transactions.
South Korea’s Kospi gained 0.6% to 2,669.81 and Australia’s S&P/ASX 200 rose 0.5% to 7,627.80.
Bangkok’s SET added 1.1% while Mumbai’s Sensex lost 0.7%.
Stocks fell Friday on Wall Street from their all-time highs in the middle falling inflation, a resilient economy and the prospect of lower interest rates which supported investors.
The S&P 500 slipped 0.3%. The benchmark index still recorded a rare ninth consecutive week of gains and is only 0.6% from its all-time high set in January 2022.
The Dow Jones Industrial Average fell 0.1% and the Nasdaq fell 0.6%.
For most of last year, gains in the broader market were largely driven by seven stocks: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla. Dubbed the Magnificent 7, they accounted for about two-thirds of the S&P 500’s gains in 2023, according to the S&P Dow Jones Indices. Nvidia leads the group with a gain of around 239%, driven by the craze around artificial intelligence.
Investors are now betting that the Federal Reserve can achieve a “soft landing,” where the economy slows just enough to quell high inflation, but not so much that it slides into a recession. The Fed is expected to begin cutting rates as early as March and has announced plans to cut its benchmark interest rate by three-quarters of a point this year. This rate is currently between 5.25% and 5.50%, its highest level in two decades.
Lower interest rates could further fuel broader market momentum in 2024. Wall Street forecasts stronger corporate profit growth next year after a largely lackluster 2023, when companies struggled with higher production and labor costs and a change in consumer spending.
The yield on the 10-year Treasury note, which reached 5% in October, was unchanged from Friday’s level of 3.88%.
The yield on two-year Treasury notes, which more closely tracks the Fed’s expectations, fell to 4.25% from 4.28% Thursday evening. It also exceeded 5% in October.
In other trading, U.S. benchmark crude oil gained $1.34 to $72.99 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, added $1.54 to $78.58 a barrel.
The US dollar rose from 140.88 Japanese yen to 141.42 Japanese yen. The euro fell to $1.1033 from $1.1047.
