Business Maverick

Business Maverick

Asian stocks decline as rates take centre stage: markets wrap

Asian stocks decline as rates take centre stage: markets wrap
An oil processing facility at the Shaybah oil field in the Rub' Al-Khali desert, also known as the 'Empty Quarter,' in Shaybah, Saudi Arabia. (Photo: Simon Dawson/ Bloomberg)

Asian stocks fell as investors focused on rate decisions by major central banks that will likely set the tone for global markets for the rest of the year.

Shares in Hong Kong and mainland China traded lower as investors remained wary over China’s economic recovery path. BlackRock Investment Institute cut equities to neutral from overweight as growth in China has slowed, while policy stimulus is not as large as in the past, according to strategists, including Jean Boivin and Wei Li.

A sliver of good news from developers Country Garden Holdings Co. and Sunac China Holdings Ltd failed to lift sentiment. Country Garden won bondholder approval on the last of a batch of eight local notes it sought to extend repayments, while Sunac secured creditors’ approval on its debt restructuring scheme.

Shares declined in Japan and extended losses in Australia, where traders parsed minutes of the central bank’s September meeting. The minutes show the central bank was open for further hikes to help bring inflation back to target.

US and Hong Kong stock futures were little changed. The S&P 500 and Nasdaq 100 indexes inched higher on Monday, as Apple Inc. climbed, while Tesla Inc. dropped as Goldman Sachs Group Inc. lowered earnings estimates for the electric-vehicle giant. 

Oil continued to trigger inflation concerns as Brent inched closer to $95 per barrel on the back of tightness in the physical market, which also spurred Chevron Corp. CEO Mike Wirth to predict that $100 oil will return.

Oil’s advance into overbought territory, however, leaves the market vulnerable to a correction. Crude dropped more than $1 after Saudi Aramco CEO Amin Nasser lowered the company’s long-term demand outlook and Saudi Energy Minister Prince Abdulaziz bin Salman said “the jury is still out” on China consumption. 

The dollar steadied with Treasury yields, with that on the policy-sensitive two-year at around 5.05%. The yuan weakened against the greenback.

Meanwhile, investors will monitor decisions coming out of meetings across half of the G20 from Wednesday, including the Federal Reserve. Advanced-economy central banks may draw particular focus as global policymakers adapt to the theme US officials set out at Jackson Hole in August: rates will likely stay higher for longer. 

With the Fed widely expected to keep rates on hold this week, traders will be focused on the so-called dot plot summary of economic forecasts. The two main questions are whether legislators will retain their projections for one more 25 basis-point hike by year-end — and how much easing they are pencilling in for 2024. In June, they projected 1 percentage point of cuts.

Elsewhere, grocery delivery business Instacart became one of the biggest companies to go public this year when it priced its initial public offering in the US at the top of a marketed range in the second marquee listing in a week.

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