(Bloomberg) — Asian shares declined the most in a month after China’s debt-swap program appeared insufficient to some investors and data pointed to persistent deflationary pressures in the world’s No. 2 economy.
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The region’s equity size fell by 1.3%, led by heavyweights including Tencent Holdings and Meituan. Taiwan Semiconductor Manufacturing Co. also fell after a Reuters report said the US had told the company to stop shipping some advanced chips often used in AI applications to Chinese customers.
China’s benchmark CSI 300 lost as much as 1.4%, before paring its decline to 0.1% at the afternoon break. An index of Chinese companies listed in Hong Kong shed more than 2%.
The broad weakness reflected lingering concerns about the outlook for the world’s No. 2 economy, after Beijing announced a 10 trillion yuan ($1.4 trillion) program to reduce local government debt risks, but stopped short of releasing new fiscal stimulus. In addition to anemic inflation, sentiment towards China is also falling as foreign direct investment continues to decline.
Investors are hoping for stronger stimulus measures that will immediately boost demand from last week’s Chinese legislative meeting, especially after Donald Trump’s presidential victory injected uncertainty over tariffs. For many economists, Beijing’s stance signals its intention to keep room to better respond to the trade war when Trump takes office next year.
“There will be more volatility” for Chinese equities, Ecaterina Bigos, head of investment for Asia excluding Japan at AXA Investment Managers, told Bloomberg Television. While policy announcements on things like real estate have helped sentiment, “the fundamental picture hasn’t changed. We haven’t seen it in terms of income.”
UBS lowered its 2025 growth forecast for China after Trump’s election, expecting expansion of “around 4%” for 2025, and a “slightly slower” pace in 2026.
Elsewhere, Bitcoin surged past $81,000 for the first time, boosted by the incoming president’s support for the digital asset and the election of pro-crypto lawmakers.
Oil fell for a second day as soft prospects for major importer China continued to hit the market, while iron ore fell to $100 a tonne.
The dollar is broadly stable. It fell 0.6% against the greenback, ahead of Japan’s parliamentary vote later Monday that will keep Prime Minister Shigeru Ishiba in office despite a national election setback.
Meanwhile, Bank of Japan board members discussed the need to be cautious about raising benchmark rates and gave no clear indication of a move next month, a summary of opinions from an October policy meeting showed.
Federal Reserve Bank of Minneapolis President Neel Kashkari indicated over the weekend that the central bank may cut rates less than previously expected amid a strong U.S. economy. However, Kashkari stressed that it is too early to determine the impact of Trump’s policies.
“The next move of the market will depend on whether Trump prioritizes cutting taxes or raising tariffs, each has a vastly different impact,” Tony Sycamore, analyst at IG Markets in Sydney, wrote in a note. “This clarification may still be months away and it should be noted that in 2016, Trump’s first step was to cut taxes that sent the stock market soaring before tariffs on China caused a major headwind.”
This week, traders will analyze data from Australian jobs to Chinese retail sales and industrial production, inflation from the US and the Eurozone as well as growth readings in the UK and Japan. A swath of Federal Reserve officials are scheduled to speak who can help share the central bank’s mind after the election results.
This week’s highlights:
Japan’s current account, Monday
Denmark CPI, Monday
Norwegian CPI, Monday
The UN climate change conference, COP29 started on Monday
German CPI, Tuesday
UK jobless claims, unemployment, Tuesday
Food speakers include Christopher Waller on Tuesday
PPI Japan, Wednesday
Euro zone industrial production, Wednesday
US CPI, Wednesday
Australian Unemployment, Thursday
Euro Zone GDP, Thursday
US PPI, unemployment claims, Thursday
Reserve Bank of Australia Governor Michele Bullock said on Thursday
Fed Chairman Jerome Powell said on Thursday
ECB President Christine Lagarde said on Thursday
BOE Governor Andrew Bailey said Thursday
Japan’s GDP, industrial production, Friday
China retail sales, industrial production, fixed asset investment, Friday
UK GDP, industrial production, trade balance, there
US retail sales, ana
Alibaba’s earnings, there
Some of the main movements in the market:
Deposit
S&P 500 futures rose 0.2% at 13:13 Tokyo time
Nikkei 225 futures (OSE) down 0.2%
Japan’s Topix down 0.2%
Australia’s S&P/ASX 200 fell 0.5%
Hong Kong’s Hang Seng down 2.1%
The Shanghai Composite was little changed
Euro Stoxx 50 futures rise 0.2%
currency
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0714
The Japanese yen fell 0.6% to 153.51 per dollar
The offshore yuan was little changed at 7.1997 per dollar
Cryptocurrencies
Bitcoin rose 2.2% to $81,647.81
Ether rose 0.4% to $3,182.31
Bond
Commodity
West Texas Intermediate crude fell 0.5% to $70.06 a barrel
Spot gold fell 0.6% to $2,669.96 an ounce
This story was produced with the help of Bloomberg Automation.
–With assistance from John Cheng.
(An earlier version of this article corrected the currency conversion in the second paragraph.)
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