Asia Stocks Dragged Down by China Share Selloff: Markets Wrap

(Bloomberg) — Asian stocks were dragged lower by losses in Hong Kong and China shares amid concern over tighter regulation on the gaming industry and fears the Chinese government’s efforts to bolster the economy are insufficient. The dollar strengthened.

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The Hang Seng Tech Index slid as much as 3.3%, putting it on course for the lowest close since November 2022. Heavyweight Tencent Holdings Ltd. dropped as much as 2.4% in Hong Kong even as JPMorgan Chase & Co. said its current valuation is attractive.

Investor sentiment remains quite negative in China despite a rally in global stocks during the past two months of 2023, Nomura Group analysts including Chetan Seth in Singapore wrote in a client note. “In China, there have been more signs of support for the economy, but equity investors still do not appear convinced.”

Benchmark stock indexes also declined in South Korea and Australia, while they rose in Taiwan. US equity futures were little changed after the S&P 500 closed marginally higher on Friday after payroll growth beat expectations but the service sector slowed. Japanese financial markets are shut for a holiday.

The dollar strengthened against most of its Group-of-10 peers, reversing earlier declines. Treasury 10-year futures edged lower. There’s no trading of cash Treasuries in Asia due to the Japanese holiday.

Investors are keeping a close eye on inflation data from China due Friday that may give a better guide on the outlook for the central bank’s policy.

While US equities gained Friday, global stocks still slid the most since October last week as markets were rattled by a deluge of corporate issuance, and the Federal Reserve indicated it was in no rush to cut interest rates.

The US jobs report last week initially cooled wagers on faster and deeper rate cuts from the Fed, but swaps traders eventually reformed bets on roughly 140 basis points of easing this year, with about a two-thirds chance of a decrease in March. Some on Wall Street kept faith in the central bank’s ability to cool the economy while side-stepping a downturn.

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Thursday’s US inflation print is expected to see the underlying measure ease further to 3.8% year-on-year in December from 4% in the month prior, according to a Bloomberg survey.

Elsewhere, Boeing Co. shares will be in focus when Wall Street opens as groundings of the 737 Max 9 aircraft gathered pace globally after a fuselage section on a brand-new Alaska Airlines jet blew out during flight.

In commodities, oil dropped after Saudi Arabia cut official selling prices for all regions, underscoring a worsening outlook and outweighing concern over Red Sea tensions and supply disruptions in Libya.

Key events this week:

• Eurozone economic confidence, retail sales, consumer confidence, Monday

• Atlanta Fed President Raphael Bostic speaks, Monday

• US House returns from recess, Monday

• Australia retail sales, Tuesday

• Japan Tokyo CPI, household spending, Tuesday

• Eurozone unemployment, Tuesday

• World Economic Forum’s global risks report released, Wednesday

• US wholesale inventories, Wednesday

• Deadline for US Securities & Exchange Commission to vote on Bitcoin ETF applications, Wednesday

• New York Fed President John Williams speaks, Wednesday

• US CPI, initial jobless claims, Thursday

• China CPI, PPI, trade, Friday

• France CPI, Friday

• UK industrial production, Friday

• US PPI, Friday

• Bank of America, Bank of New York Mellon, BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report fourth-quarter results, Friday

• Minneapolis Fed President Neel Kashkari speaks, Friday

Stocks

• S&P 500 futures were little changed as of 1:07 p.m. Tokyo time. The S&P 500 rose 0.2% on Friday

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

• Hong Kong’s Hang Seng Index fell 2%

• China’s Shanghai Composite Index fell 0.9%

• Australia’s S&P/ASX 200 Index fell 0.6%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.1% to $1.0932

• The Japanese yen rose 0.1% to 144.46 per dollar

• The offshore yuan fell 0.1% to 7.1708 per dollar

• The Australian dollar fell 0.2% to $0.6701

Cryptocurrencies

• Bitcoin fell 1.5% to $43,607.51

• Ether fell 2.1% to $2,195.1

Bonds

Commodities

• West Texas Intermediate crude fell 1.1% to $72.97 a barrel

• Spot gold fell 0.4% to $2,036.45 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess.

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