On Monday, Asian stock markets experienced a decline, driven by concerns in China’s real estate sector, leading investors to remain skeptical of efforts by authorities to revive activity in this market. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped by 0.3%, following mild gains in U.S. stocks during the previous session.
Australian shares managed to reverse earlier losses, posting a 0.12% gain, while Japan’s Nikkei stock index slid by 0.19%. Hong Kong’s Hang Seng Index took a significant hit, down by 1.4%, as investors retreated from China’s troubled property sector. The Hang Seng Property Index, which measures Hong Kong’s top developers, fell by almost 4%, while the mainland property index dropped by 3.24%.
David Chao, Invesco’s Asia Pacific market strategist, emphasized the importance of stability in the property market for any meaningful economic rebound in China. While a full-scale rebound is not anticipated, signs of stability are crucial. Investment levels have been down in the mid to high single-digit range year on year, especially in tier 2 and 3 cities, prompting several measures to address these issues.
In recent weeks, Chinese authorities have introduced various measures, including easing borrowing rules, to support the debt-laden property sector. Expectations are high for additional steps to stimulate demand in major cities like Beijing, Shanghai, and Shenzhen.
E-commerce giant Alibaba Group’s stock took a hit in Hong Kong, declining by 3.1%, following the unexpected departure of outgoing CEO Daniel Zhang from its cloud unit.
In the United States, investors are closely watching the Consumer Price Index (CPI) for August, expected to rise by 0.6% month-on-month, bringing the year-on-year rate to 3.6%. This could impact Federal Reserve decisions, with a 93% probability of rates staying the same after the September meeting.
China saw some relief from deflationary pressures, with the consumer price index (CPI) rising by 0.1% in August year on year, albeit slower than expected. Factory prices also showed improvement, with the producer price index falling by 3.0% from a year earlier, in line with expectations.
Global energy markets are monitoring Chevron Corp’s negotiations with its workers after strikes began at key liquefied natural gas (LNG) facilities in Australia, which supply 5% of the world’s output. European gas prices have been volatile since news of potential labor unrest emerged in August.
The dollar saw a decline of 0.85% against the yen, trading at 146.56, though it remains below its high for the year. The European single currency gained 0.2% against the dollar, reaching $1.0709, while the dollar index, which measures the greenback against a basket of major currencies, dropped by 0.114% to 104.73.
China’s central bank took action to strengthen the yuan by setting a daily midpoint guidance rate with the strongest bias on record, signaling concerns about the currency’s recent weakness. In the spot market, the onshore yuan traded at 7.3245 per dollar after hitting 7.3510 on Friday.
U.S. crude oil prices dipped by 0.57% to $87.01 a barrel, while Brent crude fell by 0.21% to $90.46 per barrel. Spot gold was trading slightly higher at $1,918.3663 per ounce.
The global financial landscape remains turbulent, influenced by various economic factors and market sentiment, with investors carefully monitoring developments in different regions.