Tech Drags Asia Stocks Lower in Action-Packed Week: Markets Wrap

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(Bloomberg) — Asian equities fell in the wake of big tech declines on Wall Street as traders geared up for a raft of policy decisions this week from the US, UK and Japan.

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Tech shares across the region retreated, with a gauge of the sector’s stocks set to post its biggest decline in almost a month. The drop mirrored losses in Nvidia Corp. and Meta Platforms Inc., which both fell more than 3.5% on Friday.

Distressed Chinese property developer Country Garden Holdings Co. remained in focus as it faces more tests on Monday, including a vote to extend payment on a local bond. Shares in Hong Kong underperformed the region and China’s CSI 300 Index briefly touched its lowest level this year before erasing losses as traders drew support from data last week which pointed to signs of stabilization.

China is currently undergoing a “very painful process of rebalancing”, according to Mark Matthews, head of Asia research at Julius Baer. “The government feels there’s a big mess,” he said on Bloomberg Television. “They have to clean it up. If they don’t do it now, it’s just going to be out there waiting to be done.”

Japan’s markets are shut for a holiday, with the nation’s central bank due to meet later this week. Contracts for US shares edged higher.

Also in focus is Saudi Energy Minister Prince Abdulaziz bin Salman, who is due to address an industry conference on the kingdom’s crude policy and outlook on Monday. Oil advanced for a third day, with Brent pushing toward $95 per barrel as OPEC+ supply cuts tightened the market.

There was no cash trading of Treasuries in Asian hours Monday due to the holiday. Treasury futures slipped after yields rose Friday, with the rate-sensitive two-year rate closing above 5%. The greenback weakened against most of its G-10 peers while the offshore yuan slid.

Higher for Longer

US inflation expectations fell to the lowest in more than two years as consumers grew more optimistic about the economic outlook, data showed Friday. A measure of New York state factory activity unexpectedly expanded amid new orders.

A resilient US economy will prompt the Fed to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.

“Our expectation is that there is going to be no change in the dots this year,” Ben Luk, a senior multi-asset strategist at State Street Global Markets, said on Bloomberg Television, referring to the Fed’s dot plot. “But we are going to see possibly a revision downward next year from maybe four cuts or 100-basis-point cuts next year to only 75-basis-point cuts next year to really highlight or signal that higher-for-longer message.”

Meanwhile, piles of derivatives contracts tied to stocks, index options and futures expired Friday — compelling traders to roll over their existing positions or to start new ones. This time, it coincided with the rebalancing of benchmark indexes including the S&P 500, another catalyst for more share transactions.

Elsewhere, Chevron Corp. resumed full production from a liquefied natural gas export facility in Australia that suffered a fault last week, even as union members continued strikes at the site. That took some pressure off natural gas prices.

Key events this week:

  • Apple expected to release the iPhone’s latest operating system, iOS 17, Monday

  • Reserve Bank of Australia issues minutes of September’s policy meeting, Tuesday

  • OECD releases interim economic outlook report on the global economy, Tuesday

  • Eurozone CPI, Tuesday

  • Bloomberg Future of Finance Conference in Frankfurt, with speakers to include German Finance Minister Christian Lindner, Tuesday

  • ECB Executive Board member Frank Elderson speaks, Tuesday

  • Bank of Canada Deputy Governor Sharon Kozicki speaks, Tuesday

  • Japan trade, Wednesday

  • China loan prime rates, Wednesday

  • UK CPI, Wednesday

  • Federal Reserve policy meeting, followed by Chair Jerome Powell’s news conference, Wednesday

  • Bank of Canada issues summary of September’s policy meeting, Wednesday

  • Bank of England policy meeting, Thursday

  • ECB Executive Board member Isabel Schnabel chairs panel, Thursday

  • ECB chief economist Philip Lane speaks, Thursday

  • Japan CPI, PMIs, Friday

  • Bank of Japan rate decision, Friday

  • Australia PMIs, Friday

  • China’s Bund Summit, Friday

  • Eurozone S&P Global Eurozone PMIs, Friday

  • UK S&P Global / CIPS UK Manufacturing PMI, Friday

  • ECB Vice President Luis de Guindos speaks, Friday

  • US S&P Global Manufacturing PMI, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures rose 0.2% as of 1:04 p.m. Tokyo time. The S&P 500 fell 1.2% on Friday

  • Nasdaq 100 futures rose 0.1%. The Nasdaq 100 fell 1.8%

  • Australia’s S&P/ASX 200 fell 0.6%

  • Hong Kong’s Hang Seng fell 1%

  • The Shanghai Composite was little changed

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro was little changed at $1.0664

  • The Japanese yen was little changed at 147.73 per dollar

  • The offshore yuan fell 0.1% to 7.2884 per dollar

  • The Australian dollar rose 0.2% to $0.6442

Cryptocurrencies

  • Bitcoin rose 0.9% to $26,678.43

  • Ether rose 0.9% to $1,632.66

Bonds

  • Australia’s 10-year yield advanced 11 basis points to 4.21%

Commodities

  • West Texas Intermediate crude rose 0.6% to $91.29 a barrel

  • Spot gold rose 0.3% to $1,928.90 an ounce

This story was produced with the assistance of Bloomberg Automation.

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