Asian Shares Dragged Lower by China, Treasury Yields Climb
Asian shares fell on Friday, led by losses in China, while the absence of guidance from Wall Street due to the Thanksgiving holiday added to investor caution. The dollar remained weak, and Treasury yields edged higher.
China’s blue-chip index declined by 0.7%, and Hong Kong’s Hang Seng index tumbled by 1.4%, reversing gains from the previous day. Chinese developers listed in Hong Kong also dropped by 2% after seeing a significant increase on Thursday due to additional support measures from Beijing to boost the struggling industry.
Meanwhile, Japan’s markets returned from a holiday, with the Nikkei climbing 0.7% and nearing a 33-year high reached on Monday. However, data released on Friday showed that Japan’s core consumer inflation slightly picked up in October, although it was less than expected. Additionally, factory activity continued to shrink for the sixth consecutive month.
Amid the uncertainties, Shane Oliver, Chief Economist at AMP, highlighted the possibility of a consolidation period in the market. Since share markets rebounded so quickly, they became technically overbought, so it’s quite possible we go through a period of consolidation, Oliver said. He also mentioned the often-discussed Santa rally might not occur in the last two weeks of December, potentially leading to a couple of weeks of directionless market movement.
In Europe, slightly better than expected euro zone PMIs pushed the euro and shares higher, while the Swedish crown dropped as the country’s central bank left rates unchanged. The European Central Bank’s October policy meeting minutes indicated that euro zone inflation was falling as anticipated and suggested the potential for an interest rate hike.
Elsewhere, cash Treasuries resumed trading in Asia, with two-year Treasury yields up 3 basis points to 4.9419% and benchmark ten-year yields up 4 bps to 4.4606%. The US dollar index remained weak at 103.71, nearing a three-month low.
In the commodities market, oil prices extended losses following concerns over the delayed OPEC+ meeting. Brent crude futures fell by 0.2% to $81.26 a barrel. Gold prices, on the other hand, rose by 0.1% to $1,993.63 per ounce.
As the holiday season approaches, the markets are likely to experience further lulls due to the absence of major cues and consolidation after recent rebounds. Investors will closely monitor geopolitical developments and economic indicators for guidance on market direction.
