China stocks led losses after statistics revealed that the industrial businesses’ earnings increased more slowly than expected, implying that the country’s economic recovery is still questionable. Monday’s morning session saw a 1.2% decrease in the CSI 300 Index and a 1.4% decline in the Hang Seng China Enterprises Index. Japan and Australia also saw a decline in benchmarks.
Amidst uncertainty, the equity market pared some of its gains from last week ahead of this week’s important batch of global economic data, which includes the US, European, and Chinese PMIs on Friday, the euro-zone inflation data on Thursday, and China PMIs and US PPIs on Thursday. After Friday’s post-Thanksgiving session was curtailed due to the holiday, Asian markets saw little guidance from the US.
According to Matt Simpson, a senior market strategist at City Index Inc., “We’ve seen US bond yields gap higher at the open, and that has weighed on equity market sentiment to send US futures down alongside Chinese markets that are already under pressure from weak industrial profits.”
After the S&P 500 closed Friday with gains, the VIX, a metric of equities volatility and Wall Street’s “fear gauge,” dipped to its lowest level since January 2020. This resulted in a decline in US stock futures in Asia.
Due to the muted development of Chinese industrial enterprises, businesses will probably be hesitant to grow or hire additional employees, which might put more pressure on costs. After rising 11.9% in September, profits climbed by just 2.7% in October compared to the same month last year.
In an interview with Bloomberg Television, Dong Chen, head of Asia macroeconomic research at Pictet Wealth Management, stated, “The profit numbers show that current recovery momentum is still fairly fragile.” “It will take a lot of work to get us out of the woods.”
This week, investors will be looking especially closely at Chinese activity data to gauge the health of the world’s second largest economy. Traders will be assessing shadow banking stocks after Chinese authorities said they recently opened criminal investigations into the money management business of Zhongzhi Enterprise Group Co.
In Hong Kong, the one-month interbank offered rate jumped to the highest since 2007 as the supply of cash tightened toward year-end.
Commonwealth Bank of Australia analysts, including Joseph Capurso, stated in a letter to clients that the US dollar may “remain heavy” for the most of the week as fund managers alter hedges and capital moves into emerging markets. According to them, “portfolio capital flows into emerging markets are supported by the backdrop of low volatility and expectations for a soft landing in the US economy.”
Crowdstrike Holdings Inc., whose earnings are coming this week, will highlight how companies are putting cybersecurity first in the wake of high-profile corporate attacks. Salesforce Inc. and Dell Technologies Inc., on the other hand, are anticipated to report slower sales growth as general corporate expenditure tightens.
A temporary cease-fire in Gaza may be prolonged until Monday in order to facilitate the release of more hostages and inmates, therefore traders will also be monitoring gold and oil. As traders anticipated this week’s postponed OPEC+ meeting and a risk-off mood on broader financial markets, oil prices dropped for a fourth day.