Asian Stocks to Slip; Yuan Dips, PBOC Eases Policy: Markets Wrap
Asian stocks looked set to kick off the week with declines and the yuan slipped as investors assessed the latest move by the People’s Bank of China to loosen monetary policy. Shares in China will be under pressure as traders return from a week-long holiday.
Futures in Hong Kong indicated declines when trading starts, while stocks in Australia and New Zealand fell. Japan is shut for a holiday, and Columbus Day in the U.S. means no Treasuries trade on Monday. U.S. stocks on Friday capped the worst week in a month, as the sell-off in Treasuries that took yields to seven-year highs persisted amid a solid run of data that’s emboldening investor faith for tighter monetary policy. Chinese traders are back at their desks, with the yuan weakening past 6.9 per dollar following the policy move on Friday.
China’s central bank cut the amount of cash lenders must hold as reserves for the fourth time this year, as policy makers seek to shore up the economy amid a worsening trade war. Over in the U.S., the sell-off in Treasuries that took 10-year yields to 3.24 percent last week will take a breather due to the public holiday, though discussion remains as to whether this will become a more significant stumbling block for the bull run in equities. JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. kick off earnings season for U.S. banks on Friday.
The decline in the U.S. unemployment rate to a 48-year low on Friday in addition to major upward revisions to prior months’ data added to speculation the Federal Reserve has ample reason to keep pushing up American borrowing costs. Elsewhere, West Texas Intermediate crude oil prices hovered around $74 a barrel. Investors in Brazilian assets are awaiting the results of Sunday’s presidential election that is too close to call on the current count — follow along with our live blog.
There’s also been a souring of sentiment on technology shares amid an escalating face-off between the world’s two-largest economies. A gauge of IT stocks in Asia hit its lowest level since July 2017 on Friday as investors digested a Bloomberg News report that China had infiltrated American companies with a hardware hack three years ago.