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Yen Rebound Drags on Nikkei, China Data Weighs on Hang Seng

Investor eyes are firmly fixed on US inflation data due out later in the week which will dictate the mood for the rest of the year

A trader looks at stock market monitors in Taipei. Photo: Reuters
A trader looks at stock market monitors in Taipei. Photo: Reuters


Asia’s major stock indexes saw a mixed day on Tuesday with uncertainty returning over when the US Fed will finally U-turn on interest rates, while a gloomy global outlook also helped dampen the mood.

The dollar wallowed near three-month lows with some investors remaining convinced the Federal Reserve was done with its rate-hike cycle but just as many are less than confident its tightening push is over ahead of a crucial inflation report later this week.

Japan’s Nikkei share average fell as investors locked in their profits from recent gains, with the yen’s rebound against the dollar also weighing on sentiment.


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The Nikkei closed 0.12% lower at 33,408.39 after opening 0.22% higher. The broader Topix slipped 0.21% to 2,376.71.

Hong Kong stocks fell and China shares were rangebound amid a sluggish economic recovery and weak investor sentiment.

Data on Monday showed Chinese industrial firms’ profits grew at a slower pace last month with investors also still concerned about China’s weakening property sector and related sectors.

The blue-chip CSI 300 Index gained 0.19%, and the Shanghai Composite Index edged up 0.23%, or 6.85 points, to 3,038.55. The Shenzhen Composite Index on China’s second exchange was ahead 0.60%, or 11.41 points, at 1,904.81.

Hong Kong’s Hang Seng Index lost 0.98%, or 170.92 points, to end at 17,354.14, and the Hang Seng China Enterprises Index declined 1.13%.

Meanwhile, shares on the Beijing Stock Exchange, which focuses on China’s innovative small companies, dropped 3.2% after surging 11.4% on Monday amid frenzied bets.

The bourse vowed to strengthen regulation and maintain a normal trading order on Monday after shares on the exchange rallied more than 50% since a recent low in October.

Elsewhere across the region, in earlier trade, Singapore was in the red while Sydney, Seoul, Mumbai, Wellington, Taipei, Manila and Jakarta rose.

MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.29% higher and set for a near 7% gain in November, its strongest monthly performance since January.


EU Price Growth Fight

But European stock markets were set for a lacklustre open, with Eurostoxx 50 futures down 0.11%, German DAX futures 0.18% lower and FTSE futures down 0.09%. US stock futures were little changed.

Investors are focused this week on the Fed’s preferred measure of inflation on Thursday and euro zone consumer inflation figures for further clarity on the where prices and monetary policy is headed.

If the data shows inflation cooling further, then the markets will be more comfortable with expectations that the Fed is going to pause, according to Vasu Menon, managing director of investment strategy at OCBC Bank in Singapore.

“But I think it’s not just this week’s inflation indicator, it’s also the December payroll numbers … they’ll be quite critical.”

On Monday, European Central Bank President Christine Lagarde said the central bank’s fight to contain price growth is not yet done, citing still strong wage growth and an uncertain outlook even as inflation pressures in euro zone ease.

Fed Chair Jerome Powell is also due to speak on Friday and his words will be scrutinised by traders to gauge where rates may head.


Crude Prices Ease

US data on Monday showed sales of new single-family homes fell more than expected in October as higher mortgage rates reduced affordability, but the housing segment remains supported by a persistent shortage of existing properties on the market.

The weaker-than-expected data weighed on Treasury yields, with the yield on benchmark 10-year notes slipping 9.6 basis points on Monday. In Asian hours, they were up 0.8 basis points at 4.396%.

The dollar index, a measure of the greenback against a basket of currencies, fell to 103.07, its lowest since August 31. The index is down 3% and on course for its steepest monthly decline in a year.

The Japanese yen strengthened 0.27% to 148.27 per dollar, while the euro eased 0.05% to $1.0948.

US crude eased 0.13% to $74.76 per barrel and Brent was back below $80, with oil prices swaying between gains and losses ahead of OPEC+ meeting later this week.

Spot gold was 0.1% higher at $2,015.00 an ounce, after hitting a fresh six-month peak of 2,017.89 earlier in the session.


Key figures

Tokyo – Nikkei 225 < DOWN 0.12% at 33,408.39 (close)

Hong Kong – Hang Seng Index < DOWN 0.98% at 17,354.14 (close)

Shanghai – Composite > UP 0.23% at 3,038.55 (close)

London – FTSE 100 < DOWN 0.41% at 7,430.25 (close)

New York – Dow < DOWN 0.16% at 35,333.47 (Monday close)


  • Reuters with additional editing by Sean O’Meara


Read more:

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Signs of Tightness in China’s Money Market as Month Ends

Spiralling China Lithium Prices Hit 26-Month Low on Supply Glut

Nikkei, Hang Seng, China Stocks Slip on Inflation Data Fears



Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.


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