Asian stocks fall as China PMI data weighs on sentiment: market close

(Bloomberg) – Asian stocks fell on Wednesday as growth in China's services industry slowed, underscoring concerns about the tepid recovery in the world's second-largest economy.

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A regional stock index fell 0.5% as stocks in Japan, South Korea and Australia also fell. Futures on benchmarks in the US and Europe fell slightly.

Initial losses in Chinese stocks deepened and the offshore yuan reversed its rise after the Caixin China Services PMI came in weaker than expected. The yuan's decline came despite the central bank previously maintaining support for the currency in its daily fix.

“This puts the focus back on slowing growth momentum and the recent intensification of geopolitical fears,” said Charu Chanana, market strategist at Saxo Capital Markets.

In Japan, shares of Rakuten Group Inc. fell after it was revealed the e-commerce company took a step to list its online brokerage arm. The stock fell as much as 2.9% as the market worried about debt levels before turning back into positive territory.

The two-year Treasury yield fell about four basis points to 4.9% as trading resumed on Wednesday after US Independence Day. The 10-year yield was around 3.84%.

The two-year yield on Monday surpassed the 10-year yield by the largest amount since March, when the key 2s10s portion of the yield curve was at its most inverted since the 1980s.

The yen stabilized on the stronger side of the 145 level against the dollar on Wednesday after a period of weakness caused concern among Tokyo policymakers. The Australian dollar, sensitive to China's outlook, fell after the release of PMI data.

Elsewhere, oil prices weakened after rising more than 2% on Tuesday amid output cuts in Saudi Arabia and Russia. Traders are awaiting potentially critical comments from the Saudi energy minister. Gold hasn't changed much.

After US stocks rallied in the first half of the year, investors are now concerned that higher interest rates and a deteriorating economic environment will limit gains going forward. Strategists at Goldman Sachs Group Inc. also warn of caution, writing that it is too early to rule out the risk of shares being weighed down by higher interest rates.

Not everyone is so gloomy.

“As we approach a slowdown, we want to be more conservative and higher quality,” Tai Hui, chief market strategist for Asia-Pacific at JPMorgan Asset Management, told Bloomberg Television. “But once the economy and all the bad news comes out, that's where I think equity really will shine.”

Looking further ahead, Friday's US non-farm payrolls report will be a key event for markets, offering clues as to monetary policy developments.

Important events this week:

  • Eurozone S&P Global Eurozone Services PMI, PPI, Wednesday

  • The international OPEC seminar with speakers, including OPEC+ oil ministers, begins on Wednesday in Vienna

  • FOMC releases June policy meeting minutes on Wednesday

  • New York Fed President John Williams during the “fireside chat” at the Central Bank Research Association meeting at the New York Fed on Wednesday

  • US Initial Jobless Claims, Commerce, ISM Services, Jobs, Thursday

  • Dallas Fed President Lorie Logan addresses a panel discussion on the policy challenges facing central banks at Thursday's CEBRA meeting

  • US Unemployment Rate, Nonfarm Payrolls, Friday

  • The ECB's Christine Lagarde speaks about an event in France on Friday

Some of the key moves in the markets today:

Shares

  • S&P 500 futures were down 0.1% as of 1:29 p.m. Tokyo time

  • Nasdaq 100 futures fell 0.1%

  • Japan's Topix fell 0.2%

  • Australia's S&P/ASX 200 fell 0.4%

  • Hong Kong's Hang Seng fell 1.4%

  • The Shanghai Composite fell 0.5%

  • Euro Stoxx 50 futures down 0.2%

currencies

  • The Bloomberg Dollar Spot Index is little changed

  • The euro was little changed at $1.0877

  • The Japanese yen was little changed at 144.48 per dollar

  • The offshore yuan fell 0.2% to 7.2397 per dollar

  • The Australian dollar fell 0.1% to $0.6683

cryptocurrencies

  • Bitcoin rose 0.2% to $30,862.37

  • Ether fell 0.2% to $1,938.51

Bind

raw materials

This story was created with the support of Bloomberg Automation.

– With support from John Cheng.

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