(Bloomberg) — Asian stocks and US equity futures slid as traders digested data that showed China’s economy growing at the second slowest pace since the 1970s.
Most Read from Bloomberg
An Asian equity benchmark dipped for the second day, with the Hang Seng Index down more than 1%. Contracts for the S&P 500 also fell, with US markets shut Monday. A gauge of global equities traded flat in a sign the rally that’s pushed it to the best start to a year since 1988 has stalled.
Stocks trading in Hong Kong and mainland China were mostly in the red after China said its economic growth last year slowed as Covid restrictions hammered activity. But better-than-forecast fourth quarter and December data add to optimism it may be primed for a recovery.
Among those bullish on the recovery are Goldman Sachs Group Inc. and UBS Group AG as the resumption of activity in China promises to unleash over $836 billion of excess savings, and may help ease fears of a global downturn as other central banks continue to tighten policy. A plan by Chinese financial regulators and the nation’s biggest bad-debt management companies to offer support to high-quality developers may shore up positive sentiment as well.
Shares rose in Japan, while the yen fell 0.2% against the dollar as traders weighed the prospects of a possible change in policy by the Bank of Japan on Wednesday. The nation’s 10-year yield climbed above the central bank’s ceiling for a third day as traders added to wagers that it will adjust its yield-curve control policy.
Globally, the dollar was little changed while Treasury yields climbed across the tenors.
“A reversal of a policy correction trade is likely to occur ahead of the results of the BOJ decision meeting announcement tomorrow,” said Hideyuki Ishiguro, senior strategist at Nomura Asset Management. “There was yen-buying and a selling of the Nikkei against the backdrop of policy revisions, but this morning the yen’s appreciation will take a breather, and there could be a yen selling and a buying of Nikkei futures.”
Activist investor Ryan Cohen took a stake in Alibaba Group Holding Ltd. and is advocating that the Chinese e-commerce company increase repurchases of its own shares. Some analysts say the move may lift foreign interest in the stock.
Several Federal Reserve officials will be speaking this week, providing more clues on their policy priorities. The World Economic Forum’s annual meeting kicks off in Davos, Switzerland, with speakers including European Central Bank President Christine Lagarde and the International Monetary Fund’s Kristalina Georgieva.
Raise Rates
BlackRock Inc. expects central banks to keep raising rates this year to ensure inflation sticks to its downward path. That will defy traders who expect policy makers to ease off, according to Vice Chairman Philipp Hildebrand.
Earnings reports from Goldman Sachs and Morgan Stanley due Tuesday will provide guidance about the health of the global economy.
“We are in the early stage of an earnings recession,” William Curtayne, portfolio manager at Milford Asset Management, said on Bloomberg Television. “The S&P 500 earnings are down about 5% from their peak and we see that earnings downturn going more than 20% and we think that’ll play out over the next six to nine months.”
Bitcoin dipped, but held above $21,000 in a sign of healthy risk appetite. Elsewhere, oil declined as investors waited for a market outlook from the Organization of Petroleum Exporting Countries that may yield clues about supply and demand in 2023. Gold slid.
Key events this week:
-
Earnings to include: Charles Schwab, Discover Financial, Goldman Sachs, Interactive Brokers, Investor AB, Morgan Stanley, Netflix, Procter & Gamble, Prologis, State Street
-
US Empire State manufacturing survey, Tuesday
-
Fed’s John Williams to speak, Tuesday
-
Eurozone CPI, Wednesday
-
US retail sales, PPI, industrial production, business inventories, MBA mortgage applications, cross-border investment, Wednesday
-
Bank of Japan rate decision, Wednesday
-
Federal Reserve releases Beige Book, Wednesday
-
Fed speakers include Raphael Bostic, Lorie Logan and Patrick Harker, Wednesday
-
US housing starts, initial jobless claims, Philadelphia Fed index, Thursday
-
ECB account of its December policy meeting and President Christine Lagarde on a panel in Davos, Thursday
-
Fed speakers include Susan Collins and John Williams, Thursday
-
Japan CPI, Friday
-
China loan prime rates, Friday
-
US existing home sales, Friday
-
IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday
Some of the main moves in markets:
Stocks
-
S&P 500 futures fell 0.3% as of 12:32 p.m. Tokyo time. The S&P 500 rose 0.4% on Friday
-
Nasdaq 100 futures fell 0.5%
-
Japan’s Topix index rose 0.8%
-
South Korea’s Kospi index fell 0.5%
-
Hong Kong’s Hang Seng Index fell 0.9%
-
China’s Shanghai Composite Index fell 0.2%
-
Australia’s S&P/ASX 200 Index was little changed
Currencies
-
The Bloomberg Dollar Spot Index was little changed
-
The euro was little changed at $1.0826
-
The Japanese yen fell 0.2% to 128.82 per dollar
-
The offshore yuan fell 0.3% to 6.7625 per dollar
Cryptocurrencies
-
Bitcoin fell 0.1% to $21,105.1
-
Ether fell 1.1% $1,561.69
Bonds
-
The yield on 10-year Treasuries advanced three basis point to 3.54%
-
Japan’s 10-year yield declined two basis points to 0.507%
-
Australia’s 10-year yield advanced one basis point to 3.61%
Commodities
-
West Texas Intermediate crude fell 0.6% to $79.37 a barrel
-
Spot gold fell 0.3% to $1,911.01 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Richard Henderson.
Most Read from Bloomberg Businessweek
©2023 Bloomberg L.P.
