(Bloomberg) — Asian equities fluctuated as traders awaited a raft of interest-rate decisions by central banks this week, including the Federal Reserve.
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A key stock benchmark for the region traded in a tight range, with Australia rising. Shares in mainland China eked out a gain while those in Hong Kong fell, showing weak market momentum after soft retail sales data Monday. Contracts for US equities were steady during Asia trading after the Nasdaq 100 gained more than 1% to reach another record high.
All eyes will be on a multitude of central bank policy decisions slated for this week, including the US and Japan. Sentiment in the US is relatively positive, with a widely expected quarter-point rate cut from the Fed on Wednesday seen as adding fresh support and extending gains in stocks. The yen weakened beyond the 154 level versus the dollar overnight.
“This week will probably be the final active week for the year,” said Wong Kok Hoong, head of institutional equities sales trading at Maybank Securities. “A rate cut is pretty much all priced in for the Fed, and it is also all but sure the Bank of Japan will maintain status quo. So we will expect stocks in the US and Japan to be well supported ahead of these key decisions.”
The yen snapped a six-day losing streak, as traders awaited this week’s Bank of Japan policy decision. The currency’s rapid decline in the past week toward 155 against the dollar has strategists warning that further weakness may trigger verbal intervention from authorities and add pressure on the central bank to hike rates. Traders are pricing in a less than 20% chance of a rate hike in December, according to swaps market pricing.
The Bloomberg’s dollar index was little changed Tuesday. The 10-year Treasury yield was flat at 4.39%.
The outlook for Chinese equities remains unclear after weak retail sales numbers suggest the country’s economic recovery has ways to go despite top leaders’ signals for stronger stimulus to fuel consumer demand. Chinese Premier Li Qiang urged government officials in a meeting Monday to swiftly carry out key economic tasks for the coming year.
“The totality of recent data suggests an uneven recovery in China’s economy still, which may explain why Chinese authorities have struck a more forceful tone lately in ramping up stimulus efforts into 2025,” according to Jun Rong Yeap, a market strategist at IG Asia Pte. “However, the market participants will have to second-guess on what actions will be undertaken for now.”
