(Bloomberg) — Chinese stocks notably underperformed in Asia on Wednesday as traders weighed weak economic data and Beijing’s reluctance to commit to more stimulus.
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The benchmark CSI 300 index fell as much as 7.4%, but recovered some of its losses following a report that China will hold a briefing on fiscal policy on Saturday. Chinese markets soared on Tuesday as they returned from the Golden Week holidays.
US stock futures also fell following a report that the US Department of Justice was weighing a breakup of Google. Ten-year Treasury yields hovered around the key 4% mark and oil stabilized after its biggest drop in more than a year.
Concerns have been growing in China that the latest wave of stimulus may be insufficient to convince investors of a sustainable rebound in the stock market. Chinese tourists spent less money during their long vacation, while a news report indicated that the nation needs to introduce policies to stabilize growth and expectations. This is another sign that Beijing is trying to build confidence among investors.
“For markets to maintain enthusiasm, much more aggressive gestures could be necessary for the new fiscal package or market stabilization mechanism,” said Homin Lee, senior macro strategist at Lombard Odier. “These twists are likely to persist until the meeting of the Standing Committee of the National People’s Congress and also the US elections in early November.”
The National Development and Reform Commission, China’s economic planning agency, announced that a scant 200 billion yuan ($28 billion) in spending would be advanced starting next year, after analysts estimated a package tax worth up to 3 trillion yuan in preparation.
Confidence in the bull market in China is fading “as quickly as it had momentum not long ago,” said Hebe Chen, an analyst at IG Markets Ltd.
A growing number of strategists and fund managers have in recent days expressed skepticism about the rally, saying Beijing needs to back up its spending promises with real money. Some are also concerned that many stocks have already reached overvalued levels.
“The lack of new policies from the NDRC yesterday disappointed the market,” said Steven Leung, chief executive of UOB Kay Hian Hong Kong Ltd. “Volatility is likely to continue in the fourth quarter, but liquidity will return, let’s hope let him recover to jump.” especially those foreign institutions that have been heavily underweight in Greater China.”
In corporate news, Alimentation Couche-Tard Inc. sent Seven & i Holdings Co. a new potential acquisition price of 7 trillion yen ($47.2 billion), showing that the Canadian company is still trying to enter into acquisition talks. acquisition after its initial offer was rejected. Shares of the Japanese company rose up to 12%.
Elsewhere in Asia, the dollar and New Zealand bond yields fell after the country’s central bank cut its benchmark rate by 50 basis points, while the Reserve Bank of India left rates unchanged. The RBI changed its monetary policy to neutral, which pushed up stocks. South Korea will join the benchmark FTSE Russell bond index, ending months of official campaigning and an overhaul of financial market infrastructure.
US rate cut expectations
Boston Federal Bank President Susan Collins noted that rate cuts must be careful and data-driven. His Atlanta counterpart, Raphael Bostic, said that while risks to inflation have decreased, threats to the labor market have increased, although the economy remains strong. Gov. Adriana Kugler said officials should continue to focus on bringing inflation to target, with a “balanced approach” that avoids a slowdown in employment.
“The US data is not so strong that the Fed’s contribution to the global rate-cutting cycle appears to be about to end,” said Mark Haefele of UBS Global Wealth Management. “Therefore, we maintain our conviction that investors will position themselves in favor of lower rates.”
This week’s key events:
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Fed minutes, Wednesday
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Fed’s Lorie Logan, Raphael Bostic, Austan Goolsbee and Mary Daly speak Wednesday
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US CPI, initial jobless claims, Thursday
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Fed’s John Williams and Thomas Barkin speak Thursday
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JPMorgan and Wells Fargo begin the earnings season for the big Wall Street banks on Friday
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US PPI, University of Michigan Consumer Sentiment, Friday
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Fed’s Lorie Logan, Austan Goolsbee and Michelle Bowman speak Friday
Some of the main movements in the markets:
Stocks
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S&P 500 futures fell 0.2% at 1:08 p.m. Tokyo time
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The Japanese Topix rose 0.1%
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Australia’s S&P/ASX 200 rose 0.2%
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The Shanghai Composite fell 5.3%
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Euro Stoxx 50 futures fell 0.1%
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Nasdaq 100 futures fell 0.3%
Coins
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Bloomberg Dollar Spot Index Little Changed
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The euro fell 0.1% to $1.0968
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The Japanese yen barely changed at 148.33 per dollar.
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The offshore yuan was little changed at 7.0685 per dollar.
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The Australian dollar fell 0.2% to $0.6731.
Cryptocurrencies
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Bitcoin was little changed at $62,357
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Ether was little changed at $2,443.51
Captivity
Raw materials
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West Texas Intermediate crude rose 0.4% to $73.85 a barrel
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Spot gold fell 0.1% to $2,618.16 an ounce.
This story was produced with the help of Bloomberg Automation.
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