(Bloomberg) — Asian stocks started the week on a generally positive note after China’s latest moves to shore up its stock market injected optimism. Energy stocks have been boosted by rising oil prices.
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China’s securities regulator said over the weekend it would stop lending certain stocks for short selling starting Monday. The latest measures add to measures aimed at stemming the slide in the country’s stocks, which saw the MSCI China index fall around 60% from its February 2021 peak.
“The very bad sentiment that led to this could potentially open the door for some technical rebound” in Chinese stocks, said Homin Lee, senior macro strategist at Lombard Odier, speaking on Bloomberg Television. “We are slightly more cautious because what is really needed is a change in the country’s inflation outlook and general private sector sentiment.”
Mainland Chinese stocks failed to match gains of their Hong Kong counterparts, amid concerns over a proposal requiring U.S. cloud computing companies to disclose foreign clients developing AI applications. The proposal – scheduled for release on Monday – risks escalating tensions between Washington and Beijing after some US lawmakers last week proposed legislation targeting Chinese biotechnology companies.
Property stocks earlier benefited from a tailwind after the southern city of Guangzhou eased restrictions on home purchases. However, optimism began to fade following a Hong Kong court’s order to liquidate China Evergrande Group. A Bloomberg Intelligence gauge of Chinese real estate developers was down 1% in afternoon trading after climbing as much as 3.8% earlier.
“This could serve as an example for developers undergoing restructuring,” said Willer Chen, an analyst at Forsyth Barr Asia in Hong Kong. “The outcome of the actual liquidation will affect the future decision of these creditors whether to proceed with liquidation or to exercise patience in supporting a restructuring plan.”
European and U.S. stock futures edged lower as investors weighed risks from conflicts in the Middle East at the start of a busy week for the global political outlook.
Brent and West Texas Intermediate gained for a fourth day, reaching their highest levels since November in intraday trading. The United States said Iran-backed militants had killed three service members, and U.S. President Joe Biden vowed to retaliate. Oil rose Friday after Houthi rebels attacked a ship carrying Russian fuel.
The Australian and New Zealand dollars outperformed their Group of 10 counterparts as rising commodity prices and Chinese stock market support measures boosted investor confidence.
Patience signal
The US dollar and Treasuries were little changed in Asia. Mixed U.S. economic data on Friday raised concerns that the Federal Reserve will be patient about the pace of interest rate cuts when it announces its next policy decision on Wednesday.
No policy changes are expected from the Fed this week, according to Win Thin, global head of monetary strategy at Brown Brothers Harriman.
“Discussions about slowing and possibly ending quantitative tightening are likely to continue, but we believe it is too early to announce any changes at this meeting,” he wrote in a note. “Risks for the dollar remain tilted to the upside this week as it is possible that future fed funds prices will converge with the FOMC projections.”
This week also brings a host of key data, from European GDP on Tuesday, to China’s PMI and Australian inflation on Wednesday, then European inflation and a Bank of England policy decision on Thursday. Large technology companies such as Microsoft Corp. and Apple Inc. will shed light on the current earnings season when they release their results.
Key events this week:
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Retail sales in Australia, Tuesday
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Eurozone economic confidence, GDP, consumer confidence, Tuesday
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European Central Bank board members Boris Vujcic and Philip Lane speak on Tuesday
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Conf. Consumer Confidence Council, Tuesday
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Microsoft Corp. and Alphabet Inc. will report results on Tuesday
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Australian CPI, Wednesday
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Japanese industrial production, retail sales, Wednesday
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China non-manufacturing PMI, manufacturing PMI, Wednesday
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IPC France, Wednesday
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Germany CPI, unemployment, Wednesday
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ECB chief economist Philip Lane speaks on Wednesday
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Fed rate decision and US employment cost index on Wednesday
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Boeing Co. reports earnings Wednesday
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U.S. Treasury’s quarterly redemption, during which officials will announce plans Wednesday for auctions of 3-year notes, 10-year notes and 30-year bonds and other borrowing plans.
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Japanese PMI, Thursday
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Caixin Chinese manufacturing PMI index, Thursday
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Eurozone S&P Global Manufacturing PMI, CPI, unemployment, Thursday
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Bank of England rate decision on Thursday
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ECB Governing Council member Mario Centeno speaks on Thursday
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American manufacturing ISM, first unemployment claims, Thursday
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Apple Inc., Amazon.com Inc. and Meta Platforms Inc. will report results on Thursday
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German lawmakers vote on the revised federal budget for 2024 on Friday.
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ECB Governing Council member Mario Centeno speaks on Friday
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U.S. jobs report, University of Michigan consumer sentiment, factory orders, Friday
Actions
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S&P 500 futures were little changed as of 2:55 p.m. Tokyo time. The S&P 500 was little changed on Friday
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Nasdaq 100 futures were little changed. The Nasdaq 100 fell 0.5%
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The Japanese Topix rose 1.1%
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Hong Kong’s Hang Seng rose 0.6%
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The Shanghai Composite index fell 0.6%
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Euro Stoxx 50 futures fell 0.2%
Currencies
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Bloomberg Dollar Spot Index little changed
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The euro fell 0.1% to $1.0840
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The Japanese yen was little changed at 148.07 per dollar.
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The offshore yuan was little changed at 7.1947 per dollar.
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The Australian dollar rose 0.2% to $0.6590
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The British pound was little changed at $1.2702
Cryptocurrencies
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Bitcoin rose 0.4% to $42,137.47
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Ether little changed at $2,263.73
Obligations
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The yield on 10-year Treasury bills changed little at 4.13%
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The Japanese 10-year yield rose 1.5 basis points to 0.720%
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Australia’s 10-year yield fell three basis points to 4.21%
Raw materials
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West Texas Intermediate crude rose 0.4% to $78.34 a barrel
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Spot gold rose 0.4% to $2,026.11 an ounce
This story was produced with the help of Bloomberg Automation.
–With help from Garfield Reynolds, Joanna Ossinger and Ishika Mookerjee.
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