Pedestrians walk past an electronic board displaying stock information inside the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Thursday, 10 November 2016. (Photo: David Moir/Bloomberg) 
Shares in Hong Kong and mainland China declined, the worst performers in the region, and forced a gauge of Asian shares to erase earlier gains. The offshore yuan also weakened to the weakest level in more than a week.
Investors see no easy fix to China’s economic slump, with fresh signs of financial stress among the nation’s dollar-bond issuers. Economists say Beijing’s plan to boost consumption still lacks steps to meaningfully bolster the recovery and are shifting their focus to potential measures from the Politburo meeting later this month.
“The market pessimism around Chinese equities is probably at a level of extreme,” John Lin, chief investment officer of China equities at AllianceBernstein, said on Bloomberg Television. “At this point, little policies probably aren’t enough. You need something bigger, something to sort of shock people out of the slumber.”
Benchmark indexes were higher in Japan and Australia. Contracts for US equities were little changed.
In the currency market, the yen weakened for a second day following Bank of Japan governor Kazuo Ueda’s comment that it would maintain monetary easing unless there is a shift in its price goal view.
Despite the yen’s weakness, the BOJ is unlikely to alter its monetary policy in next week’s meeting, said Shoki Omori, chief desk strategist at Mizuho Securities. Ueda will probably stick to his stance focusing on forward guidance and will not change major policy without guiding markets, he added.
Markets in the US closed near session highs on Tuesday, as results from Bank of America Corp. and Morgan Stanley bolstered bank shares and a rally in equities linked to artificial intelligence resumed. Both the S&P 500 and the tech-heavy Nasdaq 100 rose for a second day, while the blue-chip Dow Jones Industrial Average outperformed, up more than 1% for a seventh-day of gains, its longest winning streak in more than two years.
A gauge of dollar strength ticked higher and Treasuries were steady in Asia. Treasuries ended mixed Tuesday, with the yield on the policy-sensitive two-year note rising and the 10-year benchmark’s rate falling. In the swaps market, traders fully priced in a quarter-point hike at next week’s Federal Reserve meeting. European bonds gained after European Central Bank Governing Council member Klaas Knot said monetary tightening beyond next week’s meeting is anything but guaranteed.
Recent data suggest that central banks are inching closer to their peak monetary tightening, according to Robert Mead, head of Australia and co-head of Asia Pacific portfolio management at Pacific Investment Management Co. “Depending on the jurisdiction, we’re close,” he said on Bloomberg Television. “Bonds are now exciting. Once again, they’ve become sort of attractive for investors and there’s lots of action.”
US data showed industrial production and retail sales missed estimates, though an underlying measure of household spending pointed to a more resilient consumer.
On the earnings front, Bank of America delivered a surprise gain from its core Wall Street businesses and Morgan Stanley executives pointed to an improved outlook. Goldman Sachs Group Inc. is scheduled to report on Wednesday.
In tech, Microsoft Corp. jumped as much as 6.1% after providing details on pricing for some artificial-intelligence services. Netflix Inc. and Tesla Inc. are slated to release results on Wednesday.
“With US economic growth still robust in Q2 and the US dollar weakening modestly further,” earnings estimates could again prove conservative this quarter “and we could see companies deliver material earnings beats, on average,” strategists at JPMorgan Chase & Co., including Daniel Motoc and Bram Kaplan, wrote in a note.
Elsewhere, oil edged lower after rising more than 2% in the previous session on signs Russia is making good on its pledge to curb supplies. Gold hovered around the highest level since May. DM