(Bloomberg) — Asian stocks fell amid speculation investors are trimming some of their holdings before a rush of events in coming days including major central bank decisions, key economic data and earnings from US megacap companies.
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Hong Kong’s equity benchmark led losses in the region, falling more than 1%, while shares in Australia, Japan and mainland China also slipped. The yen held near a 12-week high before a Bank of Japan decision on Wednesday. The dollar crept higher against most of its major peers as traders positioned for a Federal Reserve policy review the same day. Treasuries were little changed, heading for a third month of gains.
“Market participants are taking risk off the table ahead of heavy event risks this week from key central bank meetings to Big tech earnings,” said Charu Chanana, a strategist at Saxo Capital Markets in Singapore.
BOJ Governor Kazuo Ueda will have investors on high alert Wednesday when he lays out a detailed plan for quantitative tightening after years of massive easing. He may also double down by adding an interest-rate hike. The central bank is looking for evidence sustained increases in wages will spur a recovery in consumption and kindle demand-led price growth, allowing authorities to further normalize monetary policy.
Implied volatility in Japanese 10-year bonds futures climbed to the highest since October on Monday. A planned cut to the BOJ’s bond purchases will probably focus on seven- to 10-year notes, data on the central bank’s debt portfolio suggest.
China’s bonds advanced, with 10-year yields dropping to another record low. The rally in the securities is seen testing the patience of the central bank, which is walking a tightrope between boosting growth with easing measures and reining in potential financial shocks from an overheated bond market.
Investors are also on the lookout for the outcome of a Chinese Politburo meeting — possibly some time this week — for any guidance on potential stimulus measures.
The S&P 500 closed marginally higher Monday with a gauge of the “Magnificent Seven” megacaps rising 1%. The Russell 2000 of smaller firms fell 1.1%. Tesla Inc. jumped on a bullish Morgan Stanley call. McDonald’s Corp. investors shrugged off a sales drop as executives pledged to launch new promotions. Energy producers joined a slide in oil.
US policymakers, who’ve kept rates at a more than two-decade high for a full year, are widely expected to leave them there again on Wednesday. But investors see officials signaling a move in September as risks grow of imperiling a solid, but moderating job market.
July’s wild ride in stocks has underscored how betting on seven large tech companies is no longer a simple, slam-dunk trade. During most of the month, investors jumped into other corners of the market on speculation Fed cuts will further boost Corporate America. Still, the S&P 500 ended up suffering two straight weeks of losses, dragged down by its most-influential group – technology.
“It’s almost impossible to know if the worst of the recent market pullback is over, but we continue to believe the equity market backdrop is favorable due to resilient growth, falling inflation, likely Fed rate cuts, and AI spending,” said David Lefkowitz at UBS Global Wealth Management.
In corporate news, BHP Group Ltd. has teamed up with Lundin Mining Corp. to buy Filo Corp., gaining access to South American copper projects.
In commodities, oil was little changed near a seven-week low on a shaky demand outlook, especially in the biggest importer China. Gold edged lower for a second day as the dollar steadied.
Key events this week:
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Eurozone economic confidence, GDP, consumer confidence, Tuesday
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US JOLTS job openings, consumer confidence, Tuesday
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Microsoft earnings, Tuesday
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Eurozone CPI, Wednesday
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Bank of Japan policy decision, Wednesday
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US ADP employment change, Wednesday
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Fed rate decision, Wednesday
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Meta Platforms earnings, Wednesday
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Eurozone S&P Global Eurozone Manufacturing PMI, unemployment, Thursday
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US initial jobless claims, ISM Manufacturing, Thursday
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Amazon, Apple earnings, Thursday
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Bank of England rate decision, Thursday
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US employment, factory orders, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures fell 0.3% as of 11:55 a.m. Tokyo time
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Nikkei 225 futures (OSE) fell 0.9%
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Japan’s Topix fell 0.9%
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Australia’s S&P/ASX 200 fell 0.6%
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Hong Kong’s Hang Seng fell 1.3%
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The Shanghai Composite fell 0.6%
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Euro Stoxx 50 futures fell 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.0817
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The Japanese yen was little changed at 154.01 per dollar
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The offshore yuan was little changed at 7.2729 per dollar
Cryptocurrencies
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Bitcoin fell 1.4% to $66,395.7
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Ether fell 0.4% to $3,308.94
Bonds
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The yield on 10-year Treasuries was little changed at 4.17%
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Japan’s 10-year yield declined one basis point to 1.015%
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Australia’s 10-year yield advanced one basis point to 4.28%
Commodities
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West Texas Intermediate crude fell 0.5% to $75.46 a barrel
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Spot gold fell 0.2% to $2,380.34 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott.
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