Asia stocks drop as China technology shares tumble: Markets wrap

Asian stocks fell, led by a selloff in technology shares in Hong Kong, amid fears of tighter regulation on the gaming industry and concern government efforts to bolster the economy are insufficient.

The Hang Seng Tech Index slid as much as 3.3%, putting it on course for the lowest close since November 2022. Benchmark stock indexes also reversed gains in South Korea and Australia. Japanese financial markets are shut for a holiday.

China’s gaming regulator early this month surprised investors with a raft of new regulations that triggered a broad tech selloff. Heavyweight Tencent Holdings Ltd. dropped as much as 2.4% in Hong Kong even as JPMorgan Chase & Co said its current valuation is attractive.

The sector remains vulnerable as capital continues to flow out of Hong Kong and investors also remain cautious as they are waiting for the final regulation after Beijing issued draft gaming regulation rules, said Willer Chen, an analyst at Forsyth Barr Asia.

US equity futures were little changed after the S&P 500 closed marginally higher on Friday following reports showing job growth beat expectations but the service sector slowed. The dollar rose against most of its its Group-of-10 peers Monday, while Treasury 10-year futures edged lower. There is no trading of cash Treasuries in Asia due to the Japanese holiday.

Investors are keeping a close eye on inflation data from China this week that may give a better guide on the outlook for central-bank policy. While China’s expected to report less disinflation, “the economy needs more support and a cut in the benchmark one-year Medium Term Lending Facility later this month seems increasingly likely,” said Marc Chandler, chief market strategist at Bannockburn Global.

While US equities gained Friday, global stocks still slid the most since October last week as markets were rattled by a deluge of corporate issuance, and the Fed indicated it was in no rush to cut interest rates.

The US jobs report last week initially cooled wagers on faster and deeper rate cuts from the Fed, but swaps traders eventually reformed bets on roughly 140 basis points of easing this year, with about a two-thirds chance of a decrease in March. Some on Wall Street kept faith in the central bank’s ability to cool the economy while side-stepping a downturn.

Thursday’s US inflation print is expected to see the underlying measure ease further to 3.8% year-on-year in December from 4% in the month prior, according to a Bloomberg survey.

Elsewhere, Boeing Co. shares will be in focus when Wall Street opens as groundings of the 737 Max 9 aircraft gathered pace globally after a fuselage section on a brand-new Alaska Airlines jet blew out during flight.

In commodities, oil dropped after Saudi Arabia cut official selling prices for all regions, underscoring a worsening outlook and outweighing concern over Red Sea tensions and supply disruptions in Libya.

Key events this week:

• Eurozone economic confidence, retail sales, consumer confidence, Monday
• Atlanta Fed President Raphael Bostic speaks, Monday
• US House returns from recess, Monday
• Australia retail sales, Tuesday
• Japan Tokyo CPI, household spending, Tuesday
• Eurozone unemployment, Tuesday
• World Economic Forum’s global risks report released, Wednesday
• US wholesale inventories, Wednesday
• Deadline for US Securities & Exchange Commission to vote on Bitcoin ETF applications, Wednesday
• New York Fed President John Williams speaks, Wednesday
• US CPI, initial jobless claims, Thursday
• China CPI, PPI, trade, Friday
• France CPI, Friday
• UK industrial production, Friday
• US PPI, Friday
• Bank of America, Bank of New York Mellon, BlackRock, Citigroup, JPMorgan Chase and Wells Fargo report fourth-quarter results, Friday
• Minneapolis Fed President Neel Kashkari speaks, Friday

Stocks

• S&P 500 futures were little changed as of 11:44 a.m. Tokyo time. The S&P 500 rose 0.2% on Friday
• Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.1%
• Hong Kong’s Hang Seng Index fell 1.8%
• China’s Shanghai Composite Index fell 0.9%
• Australia’s S&P/ASX 200 Index fell 0.3%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0940
• The Japanese yen was little changed at 144.49 per dollar
• The offshore yuan was little changed at 7.1622 per dollar
• The Australian dollar was little changed at $0.6716

Cryptocurrencies

• Bitcoin fell 1.6% to $43,532.51
• Ether fell 2% to $2,196

Bonds

• Australia’s 10-year yield advanced three basis points to 4.16%

Commodities

• West Texas Intermediate crude fell 0.9% to $73.15 a barrel
• Spot gold fell 0.1% to $2 043.03 an ounce

This story was produced with the assistance of Bloomberg Automation.