Moving markets today: Asian equities mixed; Nikkei recovers, while China stumbles on property woes, major Asian currencies weaken; spotlight on US inflation data and start of Q1 earnings season
Global markets kicked off the week with Asian shares showing a subdued performance while the dollar gained strength. Investors were pondering over when the U.S. Federal Reserve might initiate rate cuts following another impressive jobs report. Meanwhile, oil prices dipped by more than 1 per cent as tensions in the Middle East eased with Israel reducing troop presence in southern Gaza. Gold prices also saw a 1 per cent decline after reaching record highs on Friday, with U.S. Treasury yields staying elevated. Major Asian currencies weakened against the dollar. This week’s focal points include the release of U.S. consumer price inflation data for March on Wednesday and the European Central Bank’s policy meeting on Thursday, which are expected to influence global markets significantly. Additionally, the start of the first-quarter earnings season, led by banks, will be closely watched. Here are five key takeaways for your day.
Chinese state bank initiates winding-up petition against private developer
Shimao, a Chinese real estate company, disclosed on Monday to the Hong Kong stock exchange that it’s facing a winding-up petition from one of China’s major state-owned banks. The petition, initiated by China Construction Bank in Hong Kong’s High Court last Friday, relates to an outstanding financial obligation of around HK$1,579.5 million, according to Shimao Group, the FT reported.
This news comes shortly after Hong Kong’s High Court ordered the liquidation of Evergrande following a winding-up petition from one of its creditors. Additionally, Country Garden, another significant Chinese property developer, is also confronting a winding-up petition from its creditors in Hong Kong.
UK recruiters note slowest starting pay growth in over three years
According to recruiters, the pace of salary growth for permanent staff in the UK hit its slowest rate in more than three years last month. Additionally, spending on temporary workers saw its sharpest decline since July 2020, indicating a notable slowdown in the British job market, Reuters reported.
On a positive note, a recent survey by Deloitte suggests that major British companies are less worried about economic uncertainty, marking the lowest level of concern since mid-2021. However, despite this improved sentiment, there hasn’t been a noticeable increase in investment activity yet.
Oil prices drop over 1 per cent as Middle East tensions ease
Oil prices fell by over $1 per barrel on Monday as tensions in the Middle East eased. Israel withdrew more troops from southern Gaza and committed to fresh talks on a potential ceasefire, prompting a 1.5 per cent drop in Brent crude futures to $89.79 per barrel and a 1.44 per cent decrease in U.S. West Texas Intermediate crude to $85.67 per barrel.
Both Israel and Hamas dispatched teams to Egypt to participate in new talks aimed at achieving a ceasefire, easing concerns about potential disruptions in oil supply.
Big banks take the lead as Q1 earnings season begins; all eyes on US March inflation
Towards the end of this week, the European Central Bank is set to hold its monetary policy meeting, with most anticipating that interest rates will remain unchanged. While the likelihood of a rate cut on April 11 is minimal, market players have already factored in such a move for June, potentially followed by additional adjustments later in the year.
Europe’s inflation rate is decreasing at a faster pace compared to other regions, leading to speculation that interest rates might drop before those in the US or UK.
This week also marks the commencement of earnings season, with major financial institutions like JPMorgan, Citi, State Street, Wells Fargo, and BlackRock scheduled to reveal their financial results on Friday. Additionally, Boeing is slated to disclose its first-quarter deliveries on Tuesday.
Furthermore, several countries, including Saudi Arabia, will close their financial markets from Wednesday until the end of the week to observe Eid al-Fitr, marking the conclusion of Ramadan.
Asian markets mixed: Nikkei rebounds, Chinese stocks downturn on property woes
The Asian markets remained relatively stable but cautious, reflecting uncertainty about the possibility of early U.S. interest rate cuts. In Japan, stocks recovered from previous losses, particularly the Nikkei 225, which surged by 1.4 per cent, making it the top performer for the day. However, Chinese mainland stocks saw a slight decline of 0.3 per cent upon reopening after an extended holiday, while Hong Kong’s Hang Seng Index rose by 0.45 per cent.
Meanwhile, on Wall Street, there was a positive trend as main indexes closed higher due to better-than-expected job growth and steady wage increases in the U.S., indicating a strong end to the first quarter for the economy.
Major Asian currencies weakened against the dollar, with the South Korean won being the most affected, dropping by 0.27 per cent. Similarly, the Japanese yen saw a slight decrease, nearing a threshold where government intervention might occur. China’s renminbi remained relatively steady.
The yield on 10-year Treasury notes rose by 4 basis points to 4.4197 per cent, contributing to an increase in the dollar index. In commodity markets, gold prices experienced a decline of 1.1 per cent to $2,305.09 per ounce after reaching a record high the previous week, while bitcoin saw a rise in value of 2.5 per cent to $69,357.
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