SINGAPORE, Jan 26 (Reuters) – Asian shares eased on
Friday but looked set to snap a three-week losing streak, with
market moves largely subdued as investors awaited a key reading
on U.S. inflation later in the day to gauge the outlook for U.S.
interest rates.
MSCI’s broadest index of Asia-Pacific shares outside Japan
dipped 0.2%, but was on track for a weekly gain
of about 1.8%.
Trading was thinned with Australia out on a holiday.
Elsewhere, most Asian bourses were in the red as the dour
mood carried over from Wall Street after hours.
Intel’s underwhelming revenue forecasts pushed
its stock some 10% lower in extended trading, sending Asian
semiconductor shares toppling.
Nasdaq futures were last 0.77% lower, while S&P
500 futures lost 0.41%.
The pessimism looked set to continue into Europe, with
EUROSTOXX 50 futures down 0.07%.
In Hong Kong, the Hang Seng Index slid 1.8%,
dragged down by technology names, which knocked the Hang Seng
Tech Index down by nearly 4%.
Still, the HSI remained on track for a weekly gain of
4%, its best performance in about a month.
Following a
tumultuous start to the week
for Chinese markets, Beijing has since stepped in with a
wave of policy support in an attempt to restore investor
confidence and shore up its fragile economic recovery.
China’s central bank announced a deep cut to bank reserves
on Wednesday, in a move that will inject about $140 billion of
cash into the banking system.
That came a day after Bloomberg News reported authorities
are seeking to mobilise about 2 trillion yuan ($278.98 billion)
as part of a stabilisation fund to buy shares.
The moves lifted Chinese stocks in the previous sessions,
though the markets turned lower on Friday as investors locked in
profits and cautiously awaited more details on the stimulus
plans.
The CSI blue-chip index fell 0.46%, but was still
eyeing a 1.8% weekly gain. The Shanghai Composite
slipped 0.05%, though remained on track for a 2.5% weekly rise,
its largest since July 2023.
“We remain cautious on China, in line with our view for
several years,” said John Pinkel, a partner and portfolio
manager at Indus Capital.
“We see evidence of selling induced by structured ‘snowball’
products, especially from onshore China sources. This is
blending with selling driven by fund closures as well as ongoing
uncertainty about Beijing’s commitment to markets… It looks
like some investors are giving up on the market.”
Elsewhere, Japan’s Nikkei slid 1.3%, retreating from
a 34-year high hit at the start of the week, in part due to
rising expectations that the Bank of Japan (BOJ) could soon exit
its massive stimulus.
BOJ policymakers agreed to further debate the timing of an
exit from its ultra-loose monetary policy, and the appropriate
pace of interest rate hikes thereafter, minutes of their
December meeting showed on Friday.
Earlier in the week, the BOJ stood pat on its ultra-easy
monetary settings, but signalled its growing conviction that
conditions for phasing out its huge stimulus were falling into
place.
“The overall message is that the BOJ is getting closer to
pulling the trigger on calling a first rate hike,” said Joy
Yang, head of Asian economic research at Point72.
European Central Bank (ECB) policymakers likewise kept
interest rates steady on Thursday, as expected, and reaffirmed
their commitment to fighting inflation.
However, four sources told Reuters that the ECB was open to
a change in its rhetoric at the next meeting, paving the way for
an interest rate cut possibly in June, if upcoming data confirms
inflation has been vanquished.
The euro eased 0.1% to $1.08345 and was on track
to end the week with a 0.6% loss.
U.S. RESILIENCE
In the broader market, focus was on the release of the
personal consumption expenditures (PCE) price index later on
Friday, with expectations for the so-called core PCE price index
– the Federal Reserve’s preferred measure of inflation – to rise
3% on an annual basis.
Data on Thursday showed the U.S. economy grew faster than
expected in the fourth quarter amid strong consumer spending,
shrugging off dire predictions of a recession in the world’s
largest economy.
“This release shows further resilience in U.S. growth,” said
David Doyle, Macquarie’s head of economics.
“While challenges remain ahead that suggest weaker activity,
there were encouraging developments.”
U.S. Treasury yields slipped in the wake of the report which
also showed inflation pressures subsiding further, with the
benchmark 10-year yield last at 4.0951%.
The two-year yield, which closely reflects
near-term interest rate expectations, eased 3 basis points to
4.2850%.
In currencies, the U.S. dollar drew support from the strong
GDP data, pushing sterling down 0.1% to $1.26985. The
Aussie dipped 0.02% to $0.6584.
Oil prices eased slightly after ending the previous session
with a gain, as tensions in the Red Sea continued to pose a
threat to global trade.
Brent futures dipped 0.4% to $82.10 a barrel. U.S.
crude eased 0.65% to $76.86 per barrel.
Gold last bought $2,021.76 an ounce.
($1=7.1690 Chinese yuan renminbi)
(Reporting by Rae Wee; Editing by Michael Perry and Kim
Coghill)
