Asian stocks slipped on Monday as investors began the week in gloomy mood, distracted by growth worries over the world’s top two economies.
Demand for safe havens was high as equities tumbled, after monthly US payrolls figures confirmed the jobs market was losing momentum on Friday, and data on consumer prices from China showed the Asian giant remained a driver of global disinflation.
Japan’s Nikkei share average fell more than 3% in earlier trade before staging a late recovery, with technology stocks among the biggest decliners tracking heavy losses among Wall Street peers in the previous session.
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The Nikkei share average fell 0.48%, or 175.72 points, to close at 36,215.75, while the broader Topix was down 0.68%, or 17.69 points, to 2,579.73.
Japanese shares were also weighed down by a stronger yen, which rallied on Friday off the back of those downbeat US jobs numbers.
The yen last traded at 142.80 per dollar but had rallied as far as 141.75 on Friday for the first time in more than a month.
The overall firmness of the currency weighed on exporters, particularly automakers. Transport equipment dropped more than 4% to be the worst performer among the Tokyo Stock Exchange’s 33 industry groupings, all of which were down on the day.
China stocks fell to new seven-month lows, as August inflation data deepened economic worries, while Hong Kong shares declined too amid weak regional sentiment.
China’s blue-chip CSI300 index dropped 1.19% by the midday break, hitting its lowest level since early February.
The Shanghai Composite Index slipped 1.06%, or 29.32 points, to 2,736.49, while the Shenzhen Composite Index on China’s second exchange retreated 0.59%, or 8.95 points, to 1,496.23. Energy shares led the declines.
China’s consumer prices accelerated in August to their fastest pace in half a year, due to the higher costs of food from weather disruption, but were short of market expectations.
The price data released on Monday stoked expectations of further easing from authorities to stimulate growth, pushing down Chinese bond yields and weakening the yuan.
Property and tech led the decline in Hong Kong, where sentiment was also dampened by a plunge in the shares of China Renaissance Holdings, which resumed trading after a 17-month suspension. The Hang Seng Index dropped 1.42%, or 247.34 points, to 17,196.96.
US Gulf Coast Hurricane
China’s CSI financial sector sub-index fell 1.19%, the consumer staples sector was down 1.1%, the real estate index declined 1.3% and the healthcare subindex was up 0.24%.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Taipei and Wellington were also well down but Mumbai advanced. MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 1.2%, after shedding 2.25% last week.
On a steadier note, S&P 500 futures rallied 0.4% and Nasdaq futures 0.6%, following Friday’s slide. Eurostoxx 50 futures added 0.5% and FTSE futures firmed 0.6%.
Fed fund futures dipped as investors wondered whether the mixed US August payrolls report would be enough to tip the Federal Reserve into cutting rates by an outsized 50 basis points when it meets next week.
Data on August US consumer prices on Wednesday should underline the case for a cut, if not the size, with headline inflation seen slowing to 2.6% from 2.9%.
Markets are also fully priced for a quarter-point cut from the European Central Bank on Thursday, but are less sure on whether it will ease in both October and December.
The prospect of global policy easing boosted bonds, with 10-year Treasury yields hitting 15-month lows and two-year yields the lowest since March 2023.
Bonds ran into some profit taking on Monday as two-year yields nudged up to 3.704% and the 10-year to 3.748%, though the curve was still near its steepest since mid-2022.
Oil prices found some support as a potential hurricane system approached the US Gulf Coast, having suffered their biggest weekly fall in 11 months last week amid persistent concerns about global demand. Brent bounced 88 cents to reach $71.93 a barrel, while US crude firmed 91 cents to $68.58 per barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 0.48% at 36,215.75 (close)
Hong Kong – Hang Seng Index < DOWN 1.42% at 17,196.96 (close)
Shanghai – Composite < DOWN 1.06% at 2,736.49 (close)
London – FTSE 100 > UP 0.48% at 8,220.72 (0933 BST)
New York – Dow < DOWN 1.01% at 40,345.41 (Friday close)
- Reuters with additional editing by Sean O’Meara
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