(Bloomberg) — Asian equities declined Thursday as the dollar’s sustained strength and weakness in China weighed on the region’s risk appetite. Japanese stocks climbed as the yen fell.
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The MSCI Asia Pacific Index slid as much as 0.5%, with shares in China and Taiwan trading lower while those in Australia edged up. Hong Kong shares dropped amid thin volumes as the market stayed open despite signs of severe weather. An index of dollar rose nearly 0.2% to its two-year high, while the 10-year US Treasury yield gained for a third day in Asian trading. US stocks futures fell.
Assets in the region have slumped since the US election as investors assess the impact of President-elect Donald Trump’s proposed tariff policies on the region’s growth, while the surging dollar pressures the region’s currencies. The MSCI’s Asia stock benchmark is on pace for its worst week since April, while a Bloomberg gauge of Asian currencies has dropped over 1% so far this week.
“The strength in the US dollar will likely be a key overhang” for the region’s stocks, said Jun Rong Yeap, a strategist at IG Asia Pte.
Shares of the region’s chipmakers declined as investors continued to weigh the sector’s outlook after Trump’s win. Taiwan Semiconductor Manufacturing Co., a big component of the MSCI gauge, fell as much as 1%. SK Hynix, a South Korean chipmaker, sank as much as 6.1%.
Chinese equities may remain range-bound given signs from policymakers at last week’s legislative meeting that stimulus measures are probably not going to target a major reacceleration of growth, Kaanhari Singh, head of Asia cross asset strategy for Barclays, said on Bloomberg Television.
“That matters because it looks like China’s fiscal stimulus could be reactive rather than proactive,” Singh said. “The broad dollar higher theme is what has been driving risk in the region across FX and equities.”
US consumer price data was in line with expectations on a headline basis, although the annualized three-month core rate picked up. Overall, the numbers were supportive of a potential Fed cut in mid-December, with swaps traders increasing the likelihood to around 80% from about 56% earlier Wednesday.
The nuanced data led short-end bond yields to fall, with the two-year yield dropping five basis points to 4.29%. Treasury yields were slightly higher across the curve in Asian trading.
Traders will now shift their focus to US PPI data due later Thursday, which is expected to show headline and core producer prices for October rose year-over-year.
The yen fell further against the dollar to the weakest level since July. The drop has taken the yen near levels when Japanese authorities last intervened to prop up its currency, with the nation’s top foreign exchange official warning about the one-sided, sudden moves.
Elsewhere in Asia, the yields on China’s new dual-part dollar bonds declined and were at a discount to comparable Treasuries on their secondary market debut Thursday, according to credit traders. China was able to draw more than $40 billion of bids for its first dollar bond issuance since 2021, or 20 times the bonds on offer.
Shares of Tencent Holdings rose as much as 2.8% after the Chinese tech giant posted better-than-expected earnings and described green shoots in the economy. Geely Automobile Holdings shares climbed after reporting third-quarter net income growth of 92% from last year.
Australia’s unemployment rate held at 4.1% as expected, but the amount of jobs added in October was lower than expected.
Bitcoin notched another record high, climbing above $93,000 for the first time, with traders exuberant over Trump’s rhetorical support for crypto. The cryptocurrency was trading around $90,000 in early Asian trading.
In other commodities, oil retreated after a Wednesday gain. Gold edged lower for a fifth session.
Key events this week:
Eurozone GDP, Thursday
US PPI, jobless claims, Thursday
Fed speakers include Jerome Powell, John Williams and Adriana Kugler, Thursday
China retail sales, industrial production, Friday
US retail sales, Empire manufacturing, industrial production, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 2:22 p.m. Tokyo time
Nasdaq 100 futures fell 0.2%
S&P/ASX 200 futures rose 0.3%
Japan’s Topix rose 0.3%
Hong Kong’s Hang Seng fell 1.3%
The Shanghai Composite fell 0.7%
Euro Stoxx 50 futures were little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.0536
The Japanese yen fell 0.4% to 156.05 per dollar
The offshore yuan fell 0.2% to 7.2551 per dollar
Cryptocurrencies
Bitcoin rose 1.5% to $89,999.01
Ether rose 2.2% to $3,223.25
Bonds
Commodities
West Texas Intermediate crude fell 0.5% to $68.09 a barrel
Spot gold fell 0.5% to $2,560.08 an ounce
This story was produced with the assistance of Bloomberg Automation.
