Asian stocks fall as Chinese PMI data deteriorates Sentiment: Markets wrap

(Bloomberg) — Asian stocks fell on Wednesday as growth in China’s service industry slowed, underscoring concerns about a tepid recovery in the world’s second-largest economy.

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A regional measure of stocks fell 0.5%, as shares also fell in Japan, South Korea and Australia. Benchmark futures fell in the United States and Europe.

Initial losses in Chinese stocks deepened and the offshore yuan reversed its advance after the Caixin China Services Purchasing Managers’ Index was weaker than expected. The yuan’s decline came despite the central bank earlier maintaining support for the currency at its daily steady.

“This brings the focus back into slower growth momentum and the recent escalation in geopolitical anxiety,” said Charu Chana, market strategist at Saxo Capital Markets.

In Japan, shares of Rakuten Group Inc. fell. Following news that the e-commerce company made a move to list its online brokerage arm. The stock fell 2.9% amid market concerns about its debt levels, before gradually returning to positive territory.

The yield on the 2-year Treasury fell nearly four basis points to 4.9% as trading resumed on Wednesday after the US Independence Day holiday. The 10-year yield ranged around 3.84%.

The two-year yield on Monday surpassed the 10-year rate by the most since March, when the main 2s10s portion of the yield curve became the most inverting since the 1980s.

On Wednesday, the yen settled on the stronger side of the 145 level against the dollar, after a bout of weakness caused unease among policymakers in Tokyo. The Australian dollar, which is affected by the expectations of China, fell after the release of the PMI data.

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Elsewhere, oil weakened after rising more than 2% on Tuesday due to production cuts in Saudi Arabia and Russia. Traders are awaiting a critical comment from the Saudi energy minister. Gold hasn’t changed a bit.

After US stocks rose strongly in the first half of the year, investors are now worried that higher interest rates and a worsening economic backdrop will cap gains going forward. Among the cautionary notes, strategists at Goldman Sachs Group Inc. It is too early to rule out the risk of rising interest rates on equities.

Not everyone is gloomy.

“As we approach a slowdown, we want to be more conservative, tilt high-quality,” Tai Hui, chief market strategist for Asia Pacific at JPMorgan Asset Management, said on Bloomberg TV. “But once the economy gets washed away, all the bad news gets washed away, and that’s where I think stocks will really shine.”

Looking ahead, Friday’s US Nonfarm Payrolls report will be a major event for the markets providing hints on the path of monetary policy.

Main events this week:

• S&P Global Eurozone Services PMI, PPI, Wed

• The OPEC International Symposium, and speakers including OPEC+ oil ministers, kicks off in Vienna, Wednesday

• The Federal Open Market Committee releases the minutes of its June policy meeting, Wednesday

• New York Federal Reserve Bank President John Williams in a “side chat” at the Central Bank Research Association meeting at the Federal Reserve Bank of New York, Wednesday

• US Initial Jobless Claims, Commerce, ISM Services, Jobs, Thursday

• Dallas Federal Reserve Bank President Lori Logan speaks on a panel discussion about policy challenges for central banks at CEBRA meeting, Thursday

• US Unemployment Rate, Nonfarm Payrolls, Friday

• Christine Lagarde of the European Central Bank speaking at an event in France, Friday

Some of the major movements in the markets today:

Stores

• S&P 500 futures were down 0.1% as of 1:29 p.m. Tokyo time.

• Nasdaq 100 futures fell 0.1%.

• Japan’s Topix fell 0.2%.

• Australia’s S&P/ASX 200 fell 0.4%

• Hong Kong’s Hang Seng fell 1.4%

• The Shanghai Composite fell 0.5%.

• Futures on the Euro Stoxx 50 fell 0.2%.

currencies

• The Bloomberg Spot Dollar Index has not changed

• The euro was little changed at $1.0877

• The Japanese yen was little changed at 144.48 per dollar

• The external yuan fell 0.2 percent to 7.2397 per dollar

• The Australian dollar fell 0.1% to $0.6683

Digital currencies

• Bitcoin rose 0.2% to $30,862.37

• Ether fell 0.2% to $1,938.51

bonds

goods

This story was produced with help from Bloomberg Automation.

– With the help of Jun Cheng.

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