(Bloomberg) — Financial markets got off to a cautious start this week after a disappointing weekend meeting with China’s finance ministry and falling factory prices heightened concerns about the domestic economy.
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In early trading on Monday, the Australian and New Zealand dollars weakened against the US dollar, and the Chinese yuan also weakened. U.S. stock futures were firm as the S&P 500 rose 0.6% on Friday. Australian stocks rose slightly. Elsewhere, crude oil fell by 1.7%, and gold also fell slightly. Japanese markets were closed on Monday due to a public holiday, but trading in Hong Kong will resume after the three-day holiday.
Investors are looking at the Chinese market after Finance Minister Lan Foan vowed more support for the struggling real estate sector and signaled an increase in government borrowing without announcing the key amount the market was looking for. will be monitored. Separately, data on Sunday showed that consumer prices in China remained weak, with ex-factory prices falling for the 24th straight month, highlighting the need for further policy support. Ta.
“Markets will be disappointed that China’s Ministry of Finance has not announced any concrete further stimulus measures,” Richard Franulovich, head of currency strategy at Westpac Bank, said in a note to clients. “However, a more definitive market reading will be obtained when China’s regional markets open later on Monday.”
Patience is wearing thin among investors who had been waiting for more fiscal stimulus to sustain the rally sparked by stimulus measures imposed by authorities in late September. The domestic stock benchmark CSI300 index on Friday pared its biggest weekly decline since late July, while the Australian and Kiwi, which represent Chinese sentiment among developed-market currencies, fell for the second consecutive week for the first time in a month. .
Chris Weston, head of research at Pepperstone Group, said: “China’s efforts to revitalize its economy remain uncertain for some time as market participants seek to effectively estimate the certainty of China’s growth prospects. “Some things are unlikely to be well received.” “However, there was a message of strong intent and defiance to meet the 5% GDP target, with a clear desire for a significant increase in the budget deficit and the possibility of a departure from the 3% deficit limit. This may be a factor in minimizing the initial decline in capital. ”
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In the U.S., the S&P 500 index topped 5,800 on Friday, hitting a record high for the 45th time in 2024, as big banks rallied after JPMorgan Chase & Co. announced a surprise increase in net interest income. Australian stock futures rose 0.6% on Friday, while Chinese stocks contracts fell, but the move came ahead of a Treasury briefing.
The U.S. dollar rose in early trading Monday after gaining for a second straight week as traders eased expectations on the pace of the Federal Reserve’s interest rate cuts. The curve for U.S. Treasuries steepened for the second day on Friday, with the closing yield on the two-year note little changed at 3.96% and the closing yield on the 10-year note rising 4 basis points to 4.1%. Due to a public holiday in Japan, cash treasuries are closed in Asia.
“Whether the Fed decides to cut rates at a faster pace or at a slower pace, our From my point of view, the direction remains unchanged.” “We continue to encourage investors to position themselves in a low interest rate environment” by putting their money into intermediate-term investment grade bonds and blue-chip stocks, he said.
This week, China’s economic growth and retail sales figures are expected to be released, as well as inflation figures for New Zealand, Canada and the UK. Central banks in Thailand, the Philippines and Indonesia are expected to make policy decisions later this week ahead of the European Central Bank.
Barclays strategists, including Themistocris Fiotakis, said in a note to clients: “Obviously soft economic activity data and rapid inflation rates are having an immediate impact on both ECB communications and markets, with the ECB expected to see a 25bp increase this week. “We have a 95% probability of pricing in a rate cut.” “We see risks to European macro rates and interest rates as skewed to the downside, which creates room for further euro weakness, especially in the cross.”
This week’s main events:
China trade balance, Monday
Singapore GDP, Monday
India CPI, Monday
UK unemployment rate and average weekly earnings, Tuesday
Eurozone industrial production, Tuesday
Canadian Consumer Price Index, Tuesday
Goldman Sachs, Bank of America and Citigroup earnings Tuesday
Republican presidential candidate Donald Trump is scheduled to be interviewed by Bloomberg Editor-in-Chief John Micklethwait on Tuesday at the Economic Club of Chicago.
New Zealand CPI, Wednesday
Interest rate decisions by central banks of Thailand, Philippines and Indonesia Wednesday
UK CPI, PPI, RPI, House Price Index, Wednesday
ASML, Morgan Stanley earnings, Wednesday
Australian unemployment rate Thursday
Eurozone CPI, ECB Interest Rate Decision, Thursday
U.S. retail sales, unemployment claims, industrial production, business inventories, Thursday
TSMC, Netflix earnings, Thursday
Japan CPI, Friday
China’s GDP, retail sales, industrial production, housing prices, Friday
UK retail sales, Friday
The main movements in the market are:
stock
S&P 500 futures were little changed as of 8:22 a.m. Tokyo time.
Hang Seng futures unchanged
Australia’s S&P/ASX 200 rose 0.3%
currency
Bloomberg Dollar Spot Index rose 0.1%
The euro was almost unchanged at $1.0927.
The Japanese yen remained almost unchanged at 149.25 yen to the dollar.
The offshore yuan fell 0.2% to 7.0874 yuan to the dollar.
The Australian dollar fell 0.3% to $0.6732.
cryptocurrency
Bitcoin fell 0.1% to $62,679.3.
Ether rose 0.2% to $2,463.79
bond
merchandise
West Texas Intermediate crude oil fell 1.9% to $74.15 a barrel.
Spot gold fell 0.3% to $2,648.90 an ounce.
This article was produced in partnership with Bloomberg Automation.
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