Asian Stocks to Decline With China Woes in Focus: Markets Wrap
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2023-08-14 07:17
Asian equities were set to fall on Monday after shares on Wall Street capped off a poor week

Asian equities were set to fall on Monday after shares on Wall Street capped off a poor week on a down note and as China’s worsening property slump damps market sentiment.

Futures for stocks in Australia, Japan and Hong Kong all pointed lower, as did a gauge of US-listed Chinese companies. Country Garden Holdings Co., once China’s largest private-sector developer by sales, is at risk of joining a slew of defaulters and the latest economic data for the nation is likely to show little sign of a rebound in growth.

Meanwhile in Japan, the yen is trading near the closely watched 145 level versus the dollar amid depreciation pressure that has investors on watch for any signs the government may intervene as it did last year. The currency weakened for five straight days through Friday while an index of dollar strength has advanced over the last four weeks with elevated Treasury yields.

Friday’s US trading session saw a slide in tech megacaps and mixed economic data leave stocks weak and struggling for direction. In choppy trading, the S&P 500 closed at a one-month low with a drop of just 0.1%. The Nasdaq 100 notched its longest weekly losing streak this year, hovering around 15,000. Nvidia Corp. — which has more than tripled in 2023 — extended a four-day decline to 10%.

Bill Gross, the one-time bond king, said stock and Treasury bulls are wrong as both markets are “overvalued.”

The former chief investment officer of Pacific Investment Management Co. told Bloomberg Television that the fair value of the 10-year Treasury yield is about 4.5%, compared with the current level of 4.15%.

Meantime, Friday’s economic reports did little to alter swap market bets that the Federal Reserve will pause its rate hikes next month. Traders also continued to expect the central bank to signal its battle against inflation isn’t over yet.

Consumer inflation expectations as measured by the University of Michigan unexpectedly fell in early August, despite higher gasoline and grocery costs. Meantime, producer prices grew last month by more than expected, primarily due to increases in certain service categories.

Oil dlipped Monday after posting its longest streak of weekly gains since mid-2022. Multiple reports forecasting increased demand gave a fresh boost to a rally built on increased supply-disruption risks and extended Saudi production cuts.

Key events this week:

Some of the main moves in markets:

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Rita Nazareth.

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