(Bloomberg) — Asian stocks are set to fall on Monday ahead of a swath of Chinese data and a vow from the nation’s regulators to stabilize markets. South Korean assets will be closely watched after President Yoon Suk Yeol was impeached.
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Equity futures in Australia, Hong Kong and mainland China pointed to losses while those in Japan gained. The S&P 500 pared initial losses on Friday ahead of a possible hawkish cut by the Federal Reserve later this week.
The moves came as investors readied themselves for the final full week of trading this year with a series of central bank meetings including the Fed, Bank of Japan and Bank of England. Traders may begin to take profit on this year’s almost 20% rally in global stocks, fueled by gains in US tech shares and euphoria over AI.
“The uncertainty this brings may initially result in further position squaring and limit buying activity in risk,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “With developed market equities having already had such a year, throw in some big event risk and things a little funky for traders this week.”
Chinese stocks are expected to extend a selloff sparked Friday amid disappointment after Beijing pledged to boost consumption but failed to offer details on fiscal stimulus. Regulators at the weekend vowed more efforts to stabilize the property and equity markets, including increased monitoring of futures and spot trading, ahead of economic data set to be released that includes retail sales and industrial production.
The People’s Bank of China may also keep a cap on the yuan through its daily fixing as the currency faces pressure over the prospect of US tariffs, according to Commonwealth Bank of Australia.
“We expect the PBOC to keep fixing USD/CNY below 7.2000 to offset US dollar strength until there is more clarity on US tariffs,” strategists including Joseph Capurso wrote in a note to clients.
Elsewhere in Asia, the Bank of Korea pledged to use “all available policy instruments” to stabilize stock and currency markets after Yoon’s impeachment on Saturday over his short-lived attempt to impose martial law. Yoon is suspended from exercising presidential powers, and the constitution requires the prime minister to assume the role of acting president.
“Political turmoil will likely persist but unlikely to cause an extreme market reaction in USD/KRW and Korea rates,” Societe Generale analysts including Suktae Oh wrote in a note to clients. “All this political turmoil should result in monetary and fiscal stimulus actions in the early part of next year.”
Meanwhile, the world’s biggest bond market sank deeper, with the 10-year benchmark having its worst week since October, 2023.
After a series of mixed data last week — including accelerating wholesale inflation and higher-than-expected jobless claims — swaps traders have pared back wagers on the Fed’s easing path. They are now pricing in around three quarter-point rate cuts over the next 12 months. A week ago they had seen better than 50/50 odds of a fourth cut and there may be more pullbacks to come.
Elsewhere, French bond futures may react when trading begins later in the Asian day after Moody’s Ratings cut the nation’s credit grade to Aa3 from Aa2, three levels below the maximum rating. France has already been cut to equivalent levels by Fitch and S&P, heaping pressure on the new government to bring a ballooning deficit under control.
In commodities, oil rose on Friday as simmering geopolitical conflicts and the prospect of sanctions on Russia and Iran countered projections for a supply glut next year. Gold fell for a second session.
Key events this week:
Japan Jibun Bank Manufacturing and Services PMI, machinery orders, Monday
China retail sales, property prices, industrial production, Monday
India HSBC Manufacturing and Services PMI, wholesale prices, Monday
Eurozone HCOB Manufacturing and Services PMI, Monday
ECB President Christine Lagarde speaks, Monday
UK S&P Global Manufacturing and Services PMI, Monday
Bank of Canada Governor Tiff Macklem speaks, Monday
UK jobless claims, unemployment, Tuesday
Canada CPI, Tuesday
Indonesia rate decision, Wednesday
Thailand rate decision, Wednesday
UK CPI, Wednesday
Eurozone CPI, Wednesday
US rate decision, Wednesday
New Zealand GDP, Thursday
Japan rate decision, Thursday
Taiwan rate decision, Thursday
Philippines rate decision, Thursday
Sweden rate decision, Thursday
Norway rate decision, Thursday
UK BOE rate decision
US revised GDP, Thursday
Mexico rate decision, Thursday
Japan CPI, Friday
China loan prime rates, Friday
Eurozone consumer confidence, Friday
US personal income, spending & PCE inflation, Friday
Canada retail sales, Friday
Some of the main moves in markets:
Stocks
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0497
The Japanese yen was little changed at 153.67 per dollar
The offshore yuan was little changed at 7.2804 per dollar
The Australian dollar was little changed at $0.6358
Cryptocurrencies
Bitcoin rose 0.4% to $103,231.04
Ether rose 0.8% to $3,885.33
Bonds
Commodities
This story was produced with the assistance of Bloomberg Automation.
