Asian stocks slipped into the red on Monday with investors on edge ahead of key US and European inflation data due out later in the week.
And figures showing profits at China’s industrial firms grew at a slower pace last month also dampened the mood at the start of the week, while the approach of the month-end has added even more caution to an already risk-averse market.
Japan’s Nikkei share average ended lower as investors turned cautious ahead of those US figures, prompting them to sell stocks to lock in profits.
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The Nikkei index fell 0.53% to close at 33,447.67. The index opened higher and rose as much as 0.6% earlier in the session before surrendering the gains as investors sold stocks to lock in profits. The broader Topix slipped 0.38% to 2,381.76.
Among individual stocks, technology investor SoftBank Group fell 1.69% to drag the Nikkei the most.
China stocks fell too, as data showed profits at China’s industrial firms grew at a slower pace in October, suggesting policy support measures need to be sustained to help shore up growth in the world’s second-largest economy, while strong foreign outflows also dented investor sentiment.
Foreign investors had sold a net 4 billion yuan ($554.70 million) of Chinese shares via the Stock Connect before the close of trading.
The blue-chip CSI 300 Index lost 0.74%, and the Shanghai Composite Index was down 0.30%, or 9.27 points, to 3,031.70. The Shenzhen Composite Index on China’s second exchange retreated 0.38%, or 7.20 points, to 1,893.39.
Hong Kong’s Hang Seng Index edged back 0.20%, or 34.36 points, to 17,525.06, while the Hang Seng China Enterprises Index declined 0.26%. The Hang Seng Mainland Properties Index slumped 2.51% but the Hang Seng Tech Index gained 0.17%.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Taipei, Bangkok and Wellington were all in the red. MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.4%, giving it a monthly gain of 6.3%.
Bonds Rally
Eurostoxx 50 futures eased 0.3%, while FTSE futures similarly fell 0.3%. S&P 500 futures eased 0.2% and Nasdaq futures lost 0.4%. The S&P 500 cash index has rallied for four weeks straight and is up 8.7% on the month so far, which would be its best performance since mid-2022.
The Federal Reserve’s favoured measure of core inflation is due on Thursday and is expected to slow to its lowest since mid-2021, reinforcing market wagers that the next move in rates will be down.
Fed Chair Jerome Powell will have a chance to push back against the doves at a Fireside Chat on Friday, and there are at least seven other Fed speakers on the docket this week.
European Central Bank President Christine Lagarde has also sounded in no hurry to ease and will have another opportunity to ram home the message at the EU parliament later on Monday.
Data on EU consumer prices for November is due Thursday and expected to show a cooling in both the headline and core rates, which would support market pricing for cuts.
The chance of an easing in borrowing costs has generated a big rally in bonds, with yields on 10-year Treasuries down 36 basis points so far this month at 4.50%.
That in turn has been a drag on the dollar which has lost 3% on a basket of major counterparts this month.
The oil market faces a tense few days ahead of a meeting of OPEC+ on Thursday, a meeting that had originally been slated for Sunday but was postponed as producers struggled to find a unanimous position.
Reports suggest African oil producers are seeking higher caps for 2024, while Saudi Arabia may extend its additional 1 million bpd voluntary production cut, which is due to expire at the end of December.
The uncertainty erased early gains and Brent dropped 55 cents to $80.03 a barrel, while US crude lost 60 cents to $74.94 per barrel.
Key figures
Tokyo – Nikkei 225 < DOWN 0.53% at 33,447.67 (close)
Hong Kong – Hang Seng Index < DOWN 0.20% at 17,525.06 (close)
Shanghai – Composite < DOWN 0.30% at 3,031.70 (close)
London – FTSE 100 < DOWN 0.36% at 7,460.91 (0934 GMT)
New York – Dow > UP 0.33% at 35,390.15 (close)
- Reuters with additional editing by Sean O’Meara
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