HONG KONG (AP) — Asian stocks fell on Monday, led by a more than 2% drop in Hong Kong’s Hang Seng Index, after China’s stimulus package disappointed investor expectations.
China approved a 6 trillion yuan ($839 billion) plan during a meeting of the national legislature on Friday. The long-awaited stimulus is designed to help local governments refinance their mountains of debt in the latest attempt to accelerate growth in the world’s second-largest economy.
“It is not exactly the growth rocket that many expected. While a substantial figure, the stimulus has less to do with boosting economic growth and more to do with plugging holes in a struggling local government system,” Stephen Innes of SPI Asset Management said in a note.
Meanwhile, China’s inflation rate in October rose 0.3% year-on-year, according to the National Bureau of Statistics on Saturday, marking a slowdown from September’s 0.4% rise and falling to its highest level. low in four months.
The Hang Seng fell 2.2% to 20,270.77 and the Shanghai Composite lost 0.4% to 3,437.90.
Japan’s benchmark Nikkei 225 index fell 0.4% in morning trading to 39,347.79. Australia’s S&P/ASX 200 fell 0.5% to 8,252.70. South Korea’s Kospi fell 1% to 2,534.82.
US futures rose while oil prices fell.
On Friday, the S&P 500 rose 0.4% to 5,995.54, its biggest weekly gain since early November 2023 and briefly surpassed the 6,000 level for the first time. The Dow Jones Industrial Average rose 0.6% to 43,988.99, while the Nasdaq composite added 0.1% to 19,286.78.
In the bond market, long-term Treasury yields declined.
A preliminary morning report suggested confidence among U.S. consumers rose for the fourth straight month to its highest level in six months. The University of Michigan survey, which was conducted before Tuesday’s election, also said inflation expectations for next year fell to the lowest level since 2020.
The yield on the 10-year Treasury note fell to 4.30% on Friday from 4.33% late Thursday. But it is still well above where it was in mid-September, when it was close to 3.60%.
Treasury yields rose largely because the U.S. economy has remained much more resilient than feared. The hope is that it can continue to remain strong as the Federal Reserve continues to cut interest rates to keep the labor market functioning, now that it has helped reduce inflation almost to its 2% target.
Part of the rise in yields is also due to Trump. It talks about tariffs and other policies that economists say could increase inflation and U.S. government debt, along with growth in the economy.