Asian stocks retreated on Wednesday with investors reining in their bets ahead of a key US inflation reading due out this week.
There were losses across the board as China’s economic struggles and fears of an overheating Nikkei also weighed.
Japan’s benchmark share average eased back from an all-time peak scaled in the previous session, with data suggesting that the more-than-9% gain made over the last three weeks had been too rapid.
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The Nikkei ended the day down 0.08% at 39,208.03. The benchmark marked a record intraday peak of 39,426.29 in the previous session and an all-time closing high of 39,239.52. The broader Topix was down 0.13%, or 3.51 points, to 2,674.95.
The e-commerce and gaming company DeNA stood out though with a more-than-24% surge on news it would offer a new mobile game based on the Pokemon trading cards.
A measure of momentum called the relative strength index (RSI) sat around 78 for the Nikkei on Wednesday, keeping it above the 70 line that indicates an overbought market every session since February 13.
China stocks retreated, with some investors booking profits after a recent rally led by policy support roll-outs, while property woes added to investor concerns after a liquidation petition was filed against developer Country Garden.
The developer said the petition had been filed against it for non-payment of a $205 million loan, clouding its debt revamp prospects and undermining Beijing’s effort to restore confidence in the property sector.
China’s blue-chip CSI 300 Index slipped 1.27%, while the Shanghai Composite Index lost 1.91%, or 57.63 points, to 2,957.85. The Shenzhen Composite Index on China’s second exchange slumped 3.79%, or 65.09 points, to 1,651.49.
However, the Hang Seng Property Index rose 1.5%, after Hong Kong Financial Secretary Paul Chan said the city will cancel all buy-side property tightening measures for residential properties and waive stamp duties payable on the transfer of REIT units.
But shares of Country Garden slumped 12.5% to drag on the territory’s benchmark Hang Seng Index, which dropped 1.51%, or 253.95 points, to 16,536.85.
Elsewhere across the region, in earlier trade, Sydney, Mumbai, Singapore, Bangkok and Kuala Lumpur were also lower, while Seoul gained.
US Dollar Advances
Asia’s tentative mood was likely to be mimicked in Europe, with Eurostoxx 50 futures down 0.12%, while German DAX futures were up 0.06%.
Investor focus is squarely on the personal consumption expenditures price index (PCE) for January, the Fed’s preferred inflation measure, due on Thursday.
The PCE is expected to have risen 0.3% on a monthly basis in January, up slightly from the 0.2% increase seen in December, a Reuters poll showed.
A slew of strong economic data along with inflation that has proven to be sticky has resulted in traders drastically dialling back their initial expectations of deep and early interest rate cuts from the Fed.
Markets now anticipate June to be the starting point of the easing cycle compared with March at the start of the year. Traders now expect 77 basis points of cuts this year versus pricing in 150 bps of easing at the start of the year.
Other data due this week that could help shape expectations from the Fed include the second estimate of gross domestic product, jobless claims and manufacturing activity.
The dollar index, which measures the US currency against six rivals, rose 0.116%. The yen remained bolted to the psychologically key 150 per dollar level and was last at 150.625 per dollar.
US crude fell 0.41% to $78.55 per barrel and Brent was at $83.30, down 0.42% on the day, as the prospect of a delayed US rate cutting cycle offset the boost provided by talk of extensions to production cuts from OPEC+.
Key figures
Tokyo – Nikkei 225 < DOWN 0.08% at 39,208.03 (close)
Hong Kong – Hang Seng Index < DOWN 1.51% at 16,536.85 (close)
Shanghai – Composite < DOWN 1.91% at 2,957.85 (close)
London – FTSE 100 < DOWN 0.45% at 7,648.61 (0934 GMT)
New York – Dow < DOWN 0.25% at 38,972.41 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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