MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5%
Asia’s stock markets stabilised on Tuesday as semiconductor shares rebounded to break an expensive losing streak, while a weak demand outlook from China dragged down commodity prices and investors turned their focus to U.S. earnings and data.
Bonds held firm and the dollar was steady on most majors save for the yen, which gained nearly 0.5%, and the Australian and New Zealand currencies, which dropped amid decline in metals.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.5%. Japan’s Nikkei was flat and Taiwan’s benchmark snapped five sessions of losses to gain 2%, tracking a broader bounce back in chipmaking shares and recovering some of the $100 billion in market value that was wiped off TSMC over the last few sessions.
European futures gained 0.1% and U.S. futures declined 0.2% following a 1.1% gain in the S&P 500 on Monday.
Markets are a bit rudderless right now. There are three competing themes or narratives that have not settled yet, according to Cambridge Associates Asia head and global investment strategist Aaron Costello.
On one hand, he said, market wagers on Donald Trump winning back the U.S. presidency had upward pressure on U.S. yields and the dollar, while anticipation of rate reductions in coming months had the opposite effect.
For China markets, you have the let down after the plenum, he added, which is essentially suggesting no changes in policy and certainly no major stimulus coming.
Beijing surprised markets with interest rate cuts on Monday though it has also put a spotlight on China’s economic weaknesses.
Chinese blue chips declined 1% and back below their 200-day moving average, Shanghai copper reached its lowest since April while Dalian iron ore futures declined 2% to a three-month low and dragged on the Australian dollar.
The lack of any further support measures for China’s property sector has seen sentiment weaken, ANZ analysts said in a note to clients.
The Aussie dropped to a three-week low of $0.6629 and the kiwi to a nearly three-month low of $0.5965. China’s yuan, which slid with Monday’s rate cut, hovered near 7.2740 on Tuesday.
