Stock Investors Concerned About China's Stimulus Plan: Markets Wrap

(Bloomberg) — Chinese stocks swung in a volatile session after a Finance Ministry briefing over the weekend disappointed investors and a drop in factory prices added to worries about the economy.

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Onshore stocks fluctuated between gains and losses, while Hong Kong stocks fell along with U.S. stock futures. The Chinese yuan weakened against the greenback, as did the Australian and New Zealand dollars. Oil prices fell after China's briefing lacked new stimulus to boost consumption by its biggest importer.

While China's Finance Minister Lan Fo'an promised more support for the real estate sector at a much-anticipated weekend briefing, he did not provide headlines on the monetary stimulus plan, disappointing some investors. The focus now turns to the next major policy meeting in the coming weeks – from the Communist Party-controlled parliament, which oversees the budget – for details on further support.

“Investors definitely need to be a lot more patient when it comes to the size of the stimulus package,” said Carlos Casanova, senior Asia economist at Union Bancaire Privee SA. “I think we may get some numbers before the end of the month,” but officials in Beijing are unlikely to do everything they can to save the economy.

Cash registers are closed in Asia due to a public holiday in Japan.

Before the weekend briefing, asset managers had been waiting for further fiscal measures to sustain the recovery sparked by the stimulus packages that authorities introduced in late September. Investors and analysts polled by Bloomberg had expected China to provide up to 2 trillion yuan ($283 billion) in new fiscal stimulus on Saturday, including potential subsidies, consumer vouchers and financial support for families with children.

The CSI 300 index, a benchmark for onshore stocks, on Friday narrowed its biggest weekly loss since late July, while the Aussie and the Kiwi – proxies for China sentiment among developed market currencies – fell for two straight weeks.

“Beijing has signaled greater urgency and determination to meet this year's annual targets through a series of policy measures in recent weeks, although more are likely on the way with the release of a more concrete fiscal package,” said Erin Xin, Greater China economist at HSBC Holdings Plc wrote in a note. “Further fiscal support is likely on the way, with a multi-trillion RMB package, with the next key meetings taking place later this month.”

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In commodities, Brent fell below $78 a barrel while iron ore futures in Singapore reversed an early decline. The U.S. dollar rose after rising for a second week as traders scaled back expectations about the pace of interest rate cuts by the Federal Reserve.

The Monetary Authority of Singapore left its currency settings unchanged for the sixth consecutive day. Chinese growth and retail sales are due this week, while inflation readings are expected in New Zealand, Canada and the UK. The central banks of Thailand, the Philippines and Indonesia will make policy decisions before the European Central Bank later this week.

The ECB is likely to boost the global push for monetary easing with a rate cut, which policymakers had all but ruled out just a month ago.

“The weaker economic data and faster disinflation have clearly had an immediate impact on both ECB communications and markets, which are now pricing in a 95% chance of a 25 basis point rate cut this week,” Barclays Plc strategists including Themistoklis wrote Fiotakis, in a note to customers. “We expect risks to the European macroeconomy and interest rates to trend to the downside, creating scope for further weakness in the euro, particularly in currency pairs.”

Important events this week:

• China's trade balance, Monday

• Indian CPI, Monday

• Unemployment rate and average weekly earnings in the UK, Tuesday

• Eurozone industrial production, Tuesday

• Canada CPI, Tuesday

• Goldman Sachs, Bank of America, Citigroup results, Tuesday

• Republican presidential candidate Donald Trump will be interviewed by Bloomberg Editor-in-Chief John Micklethwait at the Economic Club of Chicago on Tuesday

• New Zealand CPI, Wednesday

• Interest rate decisions by the central banks of Thailand, the Philippines and Indonesia, Wednesday

• UK CPI, PPI, RPI and house price index, Wednesday

• ASML, Morgan Stanley results, Wednesday

• Unemployment in Australia, Thursday

• Eurozone CPI, ECB interest rate decision, Thursday

• US retail sales, jobless claims, industrial production, corporate inventories, Thursday

• TSMC, Netflix results, Thursday

• Japanese CPI, Friday

• China's GDP, retail sales, industrial production, property prices, Friday

• UK retail sales, Friday

Some of the key moves in the markets:

Shares

• S&P 500 futures were little changed at 12:22 p.m. Tokyo time

• Nikkei 225 futures (OSE) rose 0.3%

• Australia's S&P/ASX 200 rose 0.7%

• Hong Kong's Hang Seng fell 0.8%

• The Shanghai Composite rose 1.2%

• Euro Stoxx 50 futures fell 0.1%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%

• The euro fell 0.1% to $1.0926

• The Japanese yen fell 0.1% to 149.31 per dollar

• The offshore yuan fell 0.2% to 7.0836 per dollar

Cryptocurrencies

• Bitcoin rose 0.3% to $62,910

• Ether rose 0.2% to $2,465.46

Bonds

raw materials

This story was produced with support from Bloomberg Automation.

– With assistance from Matthew Burgess.

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