Asian stocks swung to a loss and US equity futures fell as traders awaited further data from the US, Europe and China this week to see if the November rally can be sustained.
Key data points ahead include eurozone inflation numbers, China PMIs and the US PCE deflator all on Thursday, before US, European and Chinese PMIs on Friday, along with a number of central bank speakers. Asian markets had little direction on Monday following the holiday shortened US post-Thanksgiving session on Friday.
The MSCI gauge of Asian equities relinquished opening gains of as much as 0.4%. China stocks led declines with the Hang Seng China Enterprises Index dropping as much as 1.4%. The yen strengthened against all except one of its G10 peers.
US stock futures dropped in Asia after the S&P 500 capped a fourth week of gains Friday, when the VIX — Wall Street’s “fear gauge” and a measure of equity volatility — fell to its lowest since January 2020.
This week, investors will be looking especially closely at Chinese activity data to gauge the health of the world’s second largest economy. Traders will be assessing shadow banking stocks after Chinese authorities said they recently opened criminal investigations into the money management business of Zhongzhi Enterprise Group Co.
US stocks are likely to extend the rally but a “modest pullback would not surprise,” said Tony Sycamore, an analyst at IG Group in Sydney. “End of month, early December looks like a good candidate for a pullback to rebuild energy and to set up for the end of year fireworks.”
The dollar was mixed in early Monday trade after Bloomberg’s dollar index slipped 0.5% last week.
The US currency may “remain heavy” for most of the week as fund managers adjust hedges and cash heads into developing economies, Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients. “The backdrop of low volatility and expectations for a soft landing in the US economy supports portfolio capital flows into emerging markets,” they wrote.
Inflation readings in Australia and the Eurozone as well as personal consumption data in the US will offer clues to the rate outlooks in their respective central banks.
In earnings, Crowdstrike Holdings Inc. will underscore how businesses are prioritising cybersecurity after recent high-profile corporate hacks, while Salesforce Inc. and Dell Technologies Inc. are expected to post slower sales growth as overall corporate expenditure tightens.
Traders will also be keeping an eye on gold and oil after Israel and Hamas signaled that a temporary cease-fire in Gaza could be extended beyond Monday to allow for the release of more hostages and prisoners. Meantime, OPEC+ looks close to resolving a dispute over output quotas that forced the group to postpone a pivotal meeting at the weekend. Oil steadied after notching a three-day drop.