(Bloomberg) — Asian stocks fell amid speculation that investors are reducing some of their holdings ahead of a series of developments in the coming days, including key central bank decisions, key economic data and large-cap earnings. from the USA.
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Hong Kong’s benchmark stock index led the region’s losses, falling more than 1%, while shares in Australia, Japan and mainland China also fell. The yen held near a 12-week high before the Bank of Japan’s decision on Wednesday. The dollar rose against most of its major peers as investors positioned themselves for a review of Federal Reserve policy on the same day. Treasury bonds were little changed, headed for a third month of gains.
“Market participants are de-risking ahead of major event risks this week, from key central bank meetings to earnings from big tech companies,” said Charu Chanana, strategist at Saxo Capital Markets in Singapore.
BOJ Governor Kazuo Ueda will put investors on high alert on Wednesday when he presents a detailed plan for quantitative tightening after years of massive easing. He could also double down by adding a rise in interest rates. The central bank is looking for evidence that sustained wage increases will spur a recovery in consumption and stimulate demand-led price growth, allowing authorities to further normalize monetary policy.
Implied volatility on Japanese 10-year bond futures rose to the highest level since October on Monday. A planned cut in the Bank of Japan’s bond purchases will likely focus on seven- to 10-year notes, data on the central bank’s debt portfolio suggests.
China bonds advanced, with 10-year yields falling to another all-time low. The rally in bonds is testing the patience of the central bank, which is walking a tightrope between boosting growth with easing measures and controlling potential financial shocks arising from an overheated bond market.
Investors are also watching the outcome of a Chinese Politburo meeting – possibly later this week – for any guidance on potential stimulus measures.
The S&P 500 closed slightly higher on Monday, with a gauge of the “Magnificent Seven” megacaps rising 1%. The Russell 2000 of small companies fell 1.1%. Tesla Inc. took advantage of an upbeat decision from Morgan Stanley. McDonald’s Corp. investors ignored the drop in sales, as executives committed to launching new promotions. Energy producers joined the oil crash.
US policymakers, who have kept rates at the highest levels in two decades for an entire year, are expected to leave them at that level again on Wednesday. But investors expect authorities to signal action in September as the risks of endangering a solid but subdued job market rise.
July’s sharp rally in stocks highlighted that betting on seven major technology companies is no longer a simple and risky operation. For most of the month, investors jumped to other corners of the market on speculation that Fed cuts would further boost Corporate America. Even so, the S&P 500 ended up suffering two consecutive weeks of losses, dragged down by its most influential group – technology.
“It is nearly impossible to know whether the worst of the recent market downturn is over, but we continue to believe the stock market outlook is favorable due to resilient growth, falling inflation, likely Fed rate cuts and spending with AI,” said David Lefkowitz in UBS Global Wealth Management.
In corporate news, BHP Group Ltd. has merged with Lundin Mining Corp. to buy Filo Corp., gaining access to copper projects in South America.
In raw materials, oil remained practically unchanged near a seven-week low, amid an unstable demand outlook, especially in the largest importer, China. Gold fell for a second day as the dollar stabilized.
Main events this week:
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Eurozone economic confidence, GDP, consumer confidence, Tuesday
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US JOLTS jobs, consumer confidence, Tuesday
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Microsoft Earnings Tuesday
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Eurozone CPI, Wednesday
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Bank of Japan policy decision Wednesday
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US ADP Job Change Wednesday
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Fed Rate Decision Wednesday
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Meta Platforms Earnings Wednesday
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Eurozone S&P Global Eurozone Manufacturing PMI, Unemployment, Thursday
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U.S. Initial Jobless Claims, ISM Manufacturing, Thursday
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Amazon, Apple Earnings, Thursday
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Bank of England Rate Decision Thursday
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US employment, factory orders, Friday
Some of the main movements in the markets:
Actions
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S&P 500 futures were down 0.3% at 11:55 a.m. Tokyo time
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Nikkei 225 (OSE) futures are down 0.9%
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Japan’s Topix fell 0.9%
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Australia’s S&P/ASX 200 fell 0.6%
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Hong Kong’s Hang Seng fell 1.3%
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The Shanghai Composite fell 0.6%
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Euro Stoxx 50 futures fell 0.3%
Coins
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The Bloomberg Dollar Spot index was little changed
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The euro was little changed at $1.0817
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The Japanese yen was little changed at 154.01 per dollar
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The offshore yuan was little changed at 7.2729 per dollar
Cryptocurrencies
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Bitcoin fell 1.4% to $66,395.7
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Ether fell 0.4% to $3,308.94
Titles
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The 10-year Treasury yield was little changed at 4.17%
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Japan’s 10-year yield fell one basis point to 1.015%
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Australia’s 10-year yield rose one basis point to 4.28%
goods
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West Texas Intermediate crude fell 0.5% to $75.46 a barrel
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Spot gold fell 0.2% to $2,380.34 an ounce
This story was produced with help from Bloomberg Automation.
–With help from Jason Scott.
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