Asian stocks decline; The yen breaks through a key level: the markets are wrapping

(Bloomberg) — Stock indices fell broadly across Asia in early trade after Wall Street capped a weak week on a decline, and as slumping real estate prices in China continued to dampen market sentiment.

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Stocks rose as trading resumed in Japan after a holiday. South Korean and Australian stocks fell to join Hong Kong stock futures. A gauge of US-listed Chinese companies fell 4.8% on Friday, closing the week down 6.2%.

Meanwhile in Japan, the Yen breached a year high of 145.07 as investors will start watching for any signs that the government may intervene as it did last year. The currency weakened for five straight days through Friday while the dollar strength index advanced over the past four weeks as treasury yields rose.

Country Garden Holdings, once China’s largest private developer by sales, has been in the spotlight as the company runs the risk of joining a slew of defaulters and the country’s latest economic data is likely to show few signs of a pickup in growth. . The CSI 300, the benchmark for onshore Chinese stocks, capped its worst week since March on Friday amid signs of a worsening economy and the offshore yuan hovering near its weakest level this year.

Treasuries extended declines after U.S. producer prices rose more-than-expected on Friday, threatening to help keep interest rates higher for longer. The yield on New Zealand’s 10-year bond rose to the highest level since 2011, following moves in US bonds.

“Exaggerated”

Friday’s US trading session saw the tech giants drop, and mixed economic data left stocks weak and struggling for direction. In choppy trading, the S&P 500 closed at a one-month low with a drop of just 0.1%. The Nasdaq 100 posted its longest weekly losing streak this year, hovering around 15,000. Nvidia Corp. — which more than tripled in 2023 — extended its four-day decline to 10%.

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One-time bond king Bill Gross said the stock and Treasury bulls are wrong because both markets are “overvalued.”

The former chief investment officer of Pacific Investment Management Co. told Bloomberg Television that the fair value of the 10-year Treasury yield is about 4.5%, compared to the current level of 4.15%.

Meanwhile, Friday’s economic reports did little to change swap market bets that the Federal Reserve would hold off on raising interest rates next month. Traders also continued to expect the central bank to signal that its fight against inflation is far from over.

Consumer inflation expectations as measured by the University of Michigan unexpectedly eased in early August, despite higher gasoline and grocery costs. Meanwhile, producer prices rose more than expected last month, mainly due to increases in certain service categories.

However, economists at Goldman Sachs Group Inc. That the Fed will start cutting interest rates by the end of next June, with a gradual quarterly pace of cuts starting from that point.

Oil fell on Monday, after posting its longest streak of weekly gains since mid-2022. Multiple reports predicting an increase in demand gave new impetus to the rush built on increasing risks of supply disruptions and widening Saudi production cuts.

Main events this week:

• China’s medium-term lending, retail sales, industrial production, fixed asset investment, net foreign exchange settlement, Tuesday

• Japanese Industrial Production, GDP, Tue

• UK Unemployment Claims, Unemployment, Tue

• US retail sales, manufacturing empire, business stocks, cross-border investing, Tuesday

• Minutes from the Reserve Bank of Australia’s monetary policy meeting, Tuesday

• Minneapolis Federal Reserve Bank President Neel Kashkari speaks on Tuesday

• Real estate prices in China, Wed

• Eurozone Industrial Production, GDP, Wed

• UK CPI, Wed

• FOMC Meeting Minutes, New Housing, Industrial Production, Wed

• US Initial Jobless Claims, Conf. The board’s leading indicator, Thursday

• Eurozone CPI, Friday

• Japanese CPI, Friday

Some of the major movements in the markets:

Stores

• S&P 500 futures were up 0.2% as of 9:30 a.m. Tokyo time. The S&P 500 fell 0.1% on Friday

• Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.7%.

• Hang Seng Index futures fell 1.2%.

• Japan’s Topix rose 0.4%.

• Australia’s S&P/ASX 200 fell 0.2%

• Euro Stoxx 50 futures fell 1.4%

currencies

• The Bloomberg Spot Dollar Index has not changed

• The euro was little changed at $1.0941

• The Japanese yen was little changed at 145.14 per dollar

• The external yuan was little changed at 7.2663 per dollar

• The Australian dollar was little changed at $0.6492

Digital currencies

• Bitcoin fell 0.4% to $29,292.5

• Ether fell 0.6% to $1,842

bonds

goods

• West Texas Intermediate crude fell 0.3 percent to $82.97 a barrel

• Spot gold fell 0.1 percent to $1911.43 an ounce

This story was produced with help from Bloomberg Automation.

– With the help of Rita Nazareth.

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