MSCI’s broadest index of Asia-Pacific shares outside Japan shed another 1.7 per cent, after declining 2 per cent last week
Asian shares slipped on Monday as China’s property worries intensified the case for serious stimulus, while increasing Treasury yields boosted the dollar to a 2023 high on the embattled yen.
MSCI’s broadest index of Asia-Pacific shares outside Japan shed another 1.7 per cent, after declining 2 per cent last week. Japan’s Nikkei was 1.3 per cent lower, even as exporters drew support from the weak yen.
Chinese blue chips dropped 1.2 per cent, on top of a 3.4 per cent drop last week, amid a series of disappointing economic news culminating in a grim report on new bank loans in July.
Retail sales and industrial output figures are due Tuesday and analysts expect they will disappoint, keeping downward pressure on the yuan.
Adding to concerns about the worsening health of the country’s debt-laden property developers was news two Chinese listed firms had not received payment on maturing investment products from Zhongrong International Trust Co.
China’s Country Garden, the country’s top private property developer, is also set to suspend trading of its 11 onshore bonds from Monday.
EUROSTOXX 50 futures slid 0.4 per cent and FTSE futures 0.2 per cent. The sour mood saw S&P 500 futures and Nasdaq futures drop early gains to each decline 0.2 per cent.
That followed losses on Friday when surprisingly high data on U.S. producer prices tested market optimism that inflation would cool enough to avoid further rate hikes.
Figures on U.S. retail sales this week are predicted to show a 0.4 per cent increase in spending, with risks on the high side thanks in part to Amazon’s Prime Day.
Analysts at Bank of America say data on credit and debit card spending indicates sales could increase 0.7 per cent with activity around the July 4 holiday stronger than 2022.
Such an outcome would challenge the market’s benign outlook for rates, with futures implying a 70 per cent probability the Fed is done hiking. The market also has over 120 bps of cuts priced in for 2024 beginning from around March.
Minutes of the Fed’s last meeting are due on Wednesday and could show members wanted to keep their options open on further rate hikes.
