Asian markets were in sluggish mood at the start of the week with caution ahead of a week of big data releases and the continuing gloomy global picture dampening sentiment on trading floors.
The week ahead will see several central bank meetings, along with earnings announcements from the tech giants that have kept the S&P 500 afloat so far this year.
Japan’s Nikkei share average trimmed some early gains, as the mood turned more nervous in the afternoon session, with investors casting an eye ahead to those earnings posts and a Bank of Japan bank meeting.
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The Nikkei ended the day up 0.10% at 28,593.52 after hitting a high of 28,680.65 in the morning which had taken it close to Friday’s eight-month peak.
The broader Topix rose 0.11% to 2,037.34, also well back from the morning’s highs.
Motor-maker Nidec rallied 1.11% before headlining the handful of companies reporting earnings on Monday. On Thursday, more than 100 companies report, and that tally doubles on Friday.
The Bank of Japan also sets policy on Friday, with new governor Kazuo Ueda chairing his first meeting. While the consensus is for no change, analysts and investors are wary of surprises, like the unexpected widening of the 10-year bond yield policy band in December.
China and Hong Kong stocks started the week on a soft note amid lingering concern over the sustainability of the economic recovery, despite more bullish forecasts from global banks.
China’s economic growth of 4.5% in the first quarter beat expectations, but “favourable base effects will fade” in the second half, while “the economy remains characterised by an uneven pace of recovery,” DBS wrote in a note to clients.
Retail sales and production are picking up gradually, public sector investment has picked up too, but private investment growth is anaemic, and the external demand outlook is uncertain, the bank warned.
The Shanghai Composite Index fell 0.78%, or 25.84 points, to 3,275.41, while the Shenzhen Composite Index on China’s second exchange slipped 0.82%, or 16.91 points, to 2,049.19.
In Hong Kong, property and financial shares led the declines. The Hang Seng Index dropped 0.58%, or 115.79 points, to 19,959.94.
Elsewhere across the region, Sydney, Seoul and Singapore were all down while Mumbai, Wellington, Taipei and Manila were all up.
MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.4%.
Apple, Microsoft Earnings
Globally, Eurostoxx 50 futures and FTSE futures were both little changed. S&P 500 futures and Nasdaq futures eased 0.3% ahead of the busy week of earnings.
Apple Inc and Microsoft Corp alone have accounted for nearly half of the S&P 500’s gains through March, so there is much riding on their outlooks.
Figures on US wages and economic growth due this week will likely reinforce the case for further tightening. The Atlanta Fed’s influential GDP Now tracker has the US economy growing an annualised 2.5% in the first quarter, only a shade slower than the previous quarter.
Markets are pricing in an 86% chance the Federal Reserve will hike rates by a quarter point at its meeting in the first week of May, and fully expect a similar hike from the European Central Bank with some risk of a half-point move.
The divergence in policy between Japan and the rest of the developed world has seen the yen weaken steadily in the last few weeks, with the euro in particular hitting a six-month high.
The single currency was firm at 147.56 yen on Monday, while the dollar held at 134.35.
A higher dollar and bond yields have been a burden for gold, which shed 1.2% last week and was last lying at $1,979 an ounce.
Chicago wheat gained almost 1% after Russia threatened to terminate a grain deal allowing Ukrainian exports, raising concerns over world supplies.
Oil prices also lost ground last week, though planned production cuts from OPEC offer some support. Brent eased 66 cents on Monday to $81.00 a barrel, while US crude fell 67 cents to $77.20 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 0.10% at 28,593.52 (close)
Hong Kong – Hang Seng Index < DOWN 0.58% at 19,959.94 (close)
Shanghai – Composite < DOWN 0.78% at 3,275.41 (close)
London – FTSE 100 < DOWN 0.17% at 7,901.00 (0936 GMT)
New York – Dow > UP 0.07% at 33,808.96 (Friday close)
- Reuters with additional editing by Sean O’Meara
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