Asia Stocks in Tight Range With Eyes on China Data: Markets Wrap

This content was published on December 16, 2024 - 02:42

5 minutes

(Bloomberg) — Most Asian stocks traded in narrow ranges early Monday ahead of a swath of Chinese data and following a vow from the nation’s regulators to stabilize markets.

MSCI’s Asian benchmark was little changed as shares crept higher in Japan and Taiwan and were little changed in China. South Korean stocks erased earlier gains after President Yoon Suk Yeol was impeached on the weekend. US futures edged up after the S&P 500 closed almost unchanged Friday ahead of a policy decision by the Federal Reserve this week. Bitcoin rose to a fresh record.

The lack of direction in Asian markets comes as investors readied themselves for the final full week of trading this year with a series of central bank meetings including the Fed, Bank of Japan and Bank of England. Traders may begin to take profit on this year’s almost 20% rally in global stocks, which were fueled by gains in US tech shares and euphoria over AI.

“The uncertainty this brings may initially result in further position squaring and limit buying activity in risk,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “With developed market equities having already had such a year, throw in some big event risk and things may be a little funky for traders this week.”

China’s CSI 300 Index was little changed after sliding on Friday amid disappointment when Beijing pledged to boost consumption but failed to offer details on fiscal stimulus. Regulators at the weekend vowed more efforts to stabilize the property and equity markets, including increased monitoring of futures and spot trading, ahead of economic data set to be released that includes retail sales and industrial production.

Korea’s Kospi index opened higher Monday before erasing all its gains. The Bank of Korea pledged to use “all available policy instruments” to stabilize stock and currency markets after Yoon’s impeachment on Saturday.

“The rapid impeachment vote removes near-term uncertainty and could provide short-term relief to sentiment,” Kathleen Oh, an economist at Morgan Stanley, wrote in a note to clients. If events proceed swiftly toward fresh elections “we see limited impact on the real economy although downside risk remains if uncertainty persists longer than the previous cases of 2-to-3 months,” she said.

Treasuries edged higher after the 10-year benchmark had its worst week last week since October 2023. The yield slipped one basis point to 4.39% after climbing 24 basis points last week. Bloomberg’s dollar index crept lower after climbing the past two weeks.

After a series of mixed data last week, swaps traders have pared back wagers on the Fed’s easing path. They are now pricing in around three quarter-point rate cuts over the next 12 months. A week ago they had seen better than 50/50 odds of a fourth cut and there may be more pullbacks to come.

The Fed is likely to ease policy by 25 basis points at its meeting and remain on hold in January, Goldman Sachs analysts including Jan Hatzius wrote in a note to clients after expecting a cut next month. “Comments from Fed officials have pointed clearly to a desire to slow the pace soon.”

French bond futures fell after Moody’s Ratings cut the nation’s credit grade to Aa3 from Aa2, three levels below the maximum rating. France has already been cut to equivalent levels by Fitch and S&P, heaping pressure on the new government to bring a ballooning deficit under control.

In commodities, oil edged lower, paring Friday’s rise as simmering geopolitical conflicts and the prospect of sanctions on Russia and Iran countered projections for a supply glut next year. Gold was little changed.

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