Asian stocks lose momentum as China gains fade: Markets wrap

Asian stocks gave up some of their earlier gains following a tech-led US rally, with Chinese shares reversing course as the initial boost from hopes of fresh monetary easing subsided.

The CSI 300 gauge for mainland Chinese equities shed 0.2% after rising as much as 0.6% earlier. Its morning gains came after a Chinese central bank official signaled that authorities are prepared to further loosen policy by cutting banks’ official reserves. Gains in Hong Kong stocks narrowed considerably.

South Korean equities also changed direction, led by a fall in Samsung Electronics after the company posted its sixth straight quarter of declining operating profit.

The weakness partly offset gains in Australia and Japan, where trading resumed following a holiday break. Contracts for US stocks were marginally lower after the Nasdaq 100 outperformed on Monday. Treasuries yields slipped while the dollar was steady in Asia trading.

Apart from the latest tech rally, investor focus also will be on key inflation readings from the US and China later this week. Data released earlier showed consumer price gains in Tokyo slowed for a second month in December, broadly in line with the Bank of Japan’s view that import-driven price pressures are subsiding.

Concerns over China’s growth outlook and policy uncertainties still keep investors cautious about the country’s stocks and could cause Chinese equities to “trade in the limited range in the near term,” said Jasmine Duan, senior investment strategist at RBC Wealth Management.

“We don’t think it’s going to be a game changer at the moment,” Duan said on Bloomberg Television, referring any further monetary easing via lowering banks’ official reserves. “Investors have increased their bar for investing in China. The concern still goes to the long-term investability of China especially for the foreign investors.”

The tech rally in US stocks on Monday came as Nvidia Corp surged after announcing new artificial-intelligence products for personal computers. In contrast, Boeing Co sank as its 737 Max 9 model was temporarily grounded by authorities.

Elsewhere Bitcoin consolidated after a surge past $47 000 on bets that the US is poised to approve the launch of the nation’s first exchange-traded funds investing directly in the world’s largest digital asset.

Inflation focus

Federal Reserve Governor Michelle Bowman said inflation could fall toward the central bank’s 2% target with interest rates held at current levels, and offered potential backing for lowering borrowing costs if price pressures fade.

“Should inflation continue to fall closer to our 2% goal over time, it will eventually become appropriate to begin the process of lowering our policy rate to prevent policy from becoming overly restrictive,” Bowman said in prepared remarks to the South Carolina Bankers Association in Columbia.

Back in the corporate world, Zee Entertainment Enterprises tumbled more than 13% after Bloomberg News reported that Sony Group Corp is planning to call off a merger with its India unit.

Oil held the largest drop in about a month on signs of a weaker physical market, including a deep pricing cut by OPEC+ leader Saudi Arabia.

Key events this week:

• China aggregate financing, money supply, new yuan loans, Tuesday
• Eurozone unemployment, Tuesday
• Germany industrial production, Tuesday
• US trade, Tuesday
• US wholesale inventories, Wednesday
• The World Economic Forum’s global risks report is released, Wednesday
• New York Fed President John Williams speaks, Wednesday
• US CPI, initial jobless claims, Thursday
• China CPI, PPI, trade, Friday
• UK industrial production, Friday
• US PPI, Friday
• Some of the biggest US banks report fourth-quarter results, Friday
• Minneapolis Fed President Neel Kashkari speaks, Friday
• ECB chief economist Philip Lane speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.1% as of 2:20 p.m. Tokyo time
• Nasdaq 100 futures fell 0.1%
• Japan’s Topix rose 0.7%
• Australia’s S&P/ASX 200 rose 0.9%
• Hong Kong’s Hang Seng rose 0.1%
• The Shanghai Composite was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0953
• The Japanese yen rose 0.4% to 143.67 per dollar
• The offshore yuan was little changed at 7.1692 per dollar
• The Australian dollar fell 0.1% to $0.6712

Cryptocurrencies

• Bitcoin fell 0.8% to $46 760.6
• Ether fell 1.1% to $2 312.6

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.01%
• Japan’s 10-year yield declined 1.5 basis points to 0.585%
• Australia’s 10-year yield declined five basis points to 4.11%

Commodities

• West Texas Intermediate crude was little changed
• Spot gold rose 0.2% to $2 032.79 an ounce

This story was produced with the assistance of Bloomberg Automation.