Asia’s major stock indexes were unsettled on Thursday with investors struggling for clear direction amid China’s patchy recovery and the continuing wait for a turnaround on US interest rates.
Chinese stocks plumbed multi-year lows before bouncing back as the dour mood over China’s prospects extended into a second day, while an escalation of geopolitical tensions also kept markets on edge.
Japan’s Nikkei share average gave up early gains to end almost flat, as investors turned cautious about the recent sharp gains of the index.
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The Nikkei inched down 0.03% to close at 35,466.17, after rising as much as 0.7% earlier in the session. The broader Topix edged 0.17% lower at 2,492.09.
The Nikkei has risen 8% since the beginning of this year, hitting its highest level since February 1990 during the previous session.
Robot maker Fanuc, which has presence in China, fell 2.63% to weigh on the Nikkei the most with investors concerned about their neighbour’s outlook.
China stocks dropped to their lowest level in nearly five years before a late rally amid the prospect of some limited stimulus.
China’s economy grew 5.2% in 2023, data showed on Wednesday. That was slightly more than the official target, but the recovery was far shakier than many analysts and investors expected, with a deepening property crisis, mounting deflationary risks and tepid demand casting a pall over the outlook for this year.
China’s blue-chip CSI300 Index ended 1.41% up after hitting its lowest level since early 2019, while the Shanghai Composite Index lost 1.6% by midday before rising 0.43%, or 12.17 points, to 2,845.78.
The Shenzhen Composite Index on China’s second exchange edged up 0.22%, or 3.76 points, to 1,702.45.
Hong Kong’s benchmark Hang Seng Index gained 0.75%, or 114.89 points, to 15,391.79.
US Rates Hopes Fade
Elsewhere across the region, in earlier trade, Sydney, Singapore, Wellington, Manila and Mumbai edged down but Seoul, Taipei, Bangkok and Jakarta rose.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3% but was still languishing near Wednesday’s two-month low of 490.45 points.
The downbeat mood looked set to continue into Europe, with Eurostoxx 50 futures dipping 0.02% and FTSE futures down 0.08%. Nasdaq futures meanwhile gained 0.06%.
In the broader market, the dollar stayed elevated alongside US Treasury yields as investors pared back expectations of early rate cuts from the Fed.
Traders are now pricing in a roughly 60% chance of a Fed cut in March, as compared to a near 70% chance a month ago, according to the CME FedWatch tool.
Data on Wednesday that showed a higher-than-expected increase in US retail sales last month reinforced bets that US rates would likely stay higher for longer.
Dollar at One-Month High
The benchmark 10-year Treasury yield was last at 4.0865%, not far from Wednesday’s one-month high of 4.1290%, while the two-year yield last stood at 4.3312%.
The greenback was pinned near a one-month high against a basket of currencies at 103.18.
Against the euro, the dollar’s gains were capped, after European Central Bank (ECB) officials similarly pushed back against rate cut expectations in the euro zone.
In Britain, a hotter-than-expected reading on inflation likewise dented market expectations for an early Bank of England rate cut, propping the pound, which was last 0.18% higher at $1.2698.
“Central bankers are still casting doubts on cutting rates with alacrity in 2024,” said Thierry Wizman, global FX and interest rates strategist at Macquarie.
In commodities, oil prices edged higher, with US crude rising 61 cents to $73.17 per barrel. Brent gained 41 cents to $78.29.
Key figures
Tokyo – Nikkei 225 < DOWN 0.03% at 35,466.17 (close)
Hong Kong – Hang Seng Index > UP 0.75% at 15,391.79 (close)
Shanghai – Composite > UP 0.43% at 2,845.78 (close)
London – FTSE 100 > UP 0.01% at 7,446.45 (0933 GMT)
New York – Dow < DOWN 0.25% at 37,266.67 (Wednesday close)
- Reuters with additional editing by Sean O’Meara
Read more:
China Saw 5.2% Growth Last Year, But 2024 Likely to be Tougher
China’s Population Drops Again, Economic Fallout Fears
China’s Yuan Topples Dollar as Most Traded Moscow Currency
Hang Seng Dives as China Growth Disappoints, Nikkei Slips
