Asian stocks began the week slipping into the red with investors on edge ahead of key policy meetings for the Federal Reserve, the Bank of Japan and other central banks this week.
The Bank of Japan meet is being seen as the key risk event on Friday. Markets are looking for any signs that the BoJ could be moving away from its ultra-loose policy faster than previously thought, after recent comments by Governor Kazuo Ueda sent yields much higher. Japan’s markets were closed for a holiday.
That nervousness fed into Asia’s major markets after the weekend break though mainland China stocks saw an uplift amid signs of stabilisation in the world’s second largest economy.
However, property and technology stocks dragged on Hong Kong with the country’s real estate giants continuing to lurch from crisis to crisis.
Data on Friday showed China’s factory output and retail sales grew at a faster pace in August, while a slump in the property sector worsened despite a recent flurry of support measures.
The Shanghai Composite Index rose 0.26%, or 8.19 points, to 3,125.93, while the Shenzhen Composite Index on China’s second exchange edged up 0.54%, or 10.36 points, to 1,921.48.
The worst of China’s property crisis is not yet over, a survey of Chinese and international investors carried out by JPMorgan showed.
And Goldman Sachs said it expects the impact of the declining property sector to “likely to weigh on the economy for many quarters to come”.
Mainland property developers listed in Hong Kong lost 1.4%, and tech giants retreated 1.3%, as the benchmark Hang Seng Index dropped 1.39%, or 252.34 points, to 17,930.55.
Shares in embattled China Evergrande Group fell as much as 25% after police in southern China detained some staff at its wealth management unit, though they later pared losses to be down 1.6%.
Elsewhere across the region, in earlier trade, Sydney, Seoul, Singapore, Mumbai, Manila and Jakarta were in the red, though Wellington edged up. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%.
Europe was set for a subdued open, with Eurostoxx 50 futures off 0.1%. S&P 500 futures advanced 0.2% while Nasdaq futures edged up 0.1%.
This week, global central banks will take centre stage, with five of those overseeing the 10 most heavily traded currencies holding rate-setting meetings. A swathe of emerging market central banks will also hold meetings.
Markets are fully priced for a second straight pause from the Fed on Wednesday, with its targeted range expected to be unchanged at 5.25% to 5.5%, so the focus will be on the updated economic and rates projections. They see about 80 basis points of cuts next year.
On Thursday, the Bank of England is tipped to hike for the 15th time and take benchmark borrowing costs to 5.5%.
Cash treasuries were not traded in Asia with Tokyo shut. Treasury yields edged higher on Friday, with the two-year above the 5% threshold.
In the currency markets, the US dollar was still standing strong near its six-month top at 105.25 against a basket of major currencies.
Oil prices hit fresh 10-month peaks, further stoking inflationary pressures. US West Texas Intermediate crude futures gained 0.8% to $91.52, their highest level since November, while Brent crude futures rose 0.7% to $94.55 per barrel.
The price of gold was 0.2% higher at $1,928.13 per ounce.
Tokyo – Nikkei 225 <> CLOSED
Hong Kong – Hang Seng Index < DOWN 1.39% at 17,930.55 (close)
Shanghai – Composite > UP 0.26% at 3,125.93 (close)
London – FTSE 100 < DOWN 0.06% at 7,706.83 (0932 BST)
New York – Dow < DOWN 0.83% at 34,618.24 (Friday close)
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