(Bloomberg) — Asian equities declined Thursday as dollar strength and weakness in China weighed on the region’s risk appetite. Japanese stocks rose as the yen fell.
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The MSCI Asia Pacific index fell as much as 0.5%, with shares in China and Taiwan trading lower while those in Australia rose. Hong Kong stocks fell on thin volume as markets remained open despite signs of severe weather. The dollar index rose nearly 0.2% to a two-year high, while the 10-year U.S. Treasury yield gained a third day in Asian trade. US stock futures fell.
Assets in the region have fallen since the US election as investors assess the impact of President-elect Donald Trump’s proposed tariff policy on the region’s growth, while a rising dollar pressures the region’s currencies. MSCI Asia’s benchmark of shares is on pace for its worst week since April, while Bloomberg’s gauge of Asian currencies has fallen more than 1% so far this week.
“The strength in the US dollar is likely to be a key overhang” for regional stocks, said Jun Rong Yeap, a strategist at IG Asia Pte.
Shares of the region’s chipmaker fell as investors continued to weigh the sector’s prospects following Trump’s win. Taiwan Semiconductor Manufacturing Co., a large component of MSCI’s gauge, fell as much as 1%. SK Hynix, the South Korean chipmaker, fell as much as 6.1%.
Chinese equities may remain buoyed by signs from policymakers at a legislative meeting last week that stimulus measures are unlikely to lead to a major re-acceleration of growth, Kaanhari Singh, head of cross-Asia asset strategy for Barclays, said on Bloomberg Television.
“That’s important because it looks like China’s fiscal stimulus could be reactive rather than proactive,” Singh said. “The theme of a higher dollar is what drives risk in the region in FX and equities.”
US consumer price data was in line with expectations with the headlines, although the core three-month annual rate rose. Overall, the numbers support a potential Fed cut in mid-December, with swaps traders raising the odds to around 80% from around 56% earlier on Wednesday.
The nuanced data sent short-end bond yields down, with the two-year yield down five basis points to 4.29%. Treasury yields are slightly higher on the curve in Asian trade.
Traders will now shift their focus to US PPI data due later Thursday, which is expected to show headlines and core producer prices for October rose year-on-year.
If fell further against the dollar to the weakest level since July. The drop sent the yen nearing a close as Japanese authorities intervened to support the currency, with the country’s top foreign exchange official warning of sudden one-sided moves.
Elsewhere in Asia, yields on China’s new dual-tranche dollar bonds declined and there was a discount to similar Treasuries in a secondary market debut on Thursday, according to credit traders. China could attract more than $40 billion in bids for its first dollar bond issuance from 2021, or 20 times the bonds on offer.
Shares of Tencent Holdings rose as much as 2.8% after the Chinese tech giant posted better-than-expected earnings and reflected a green tip in the economy. Changes in the share price of Geely Automobile Holdings Ltd. for the week it was 92%.
Australia’s unemployment rate was held at 4.1% as expected, but the number of jobs added in October was lower than expected.
Bitcoin notched another record high, climbing above $93,000 for the first time, with traders exuberant over Trump’s rhetorical support for the crypto. The cryptocurrency traded around $90,000 in early Asian trade.
In other commodities, oil retreated after Wednesday’s gains. Gold fell for the fifth session.
This week’s highlights:
Euro Zone GDP, Thursday
US PPI, unemployment claims, Thursday
Food speakers include Jerome Powell, John Williams and Adriana Kugler on Thursday
China retail sales, industrial production, Friday
US retail sales, Empire manufacturing, industrial production, Friday
Some of the main movements in the market:
Savings
S&P 500 futures fell 0.1% at 2:22 pm Tokyo time
Nasdaq 100 futures down 0.2%
S&P/ASX 200 futures up 0.3%
Japan’s Topix rises 0.3%
Hong Kong’s Hang Seng down 1.3%
Shanghai Composite down 0.7%
Euro Stoxx 50 futures were little changed
currency
Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.0536
The Japanese yen fell 0.4% to 156.05 per dollar
The offshore yuan fell 0.2% to 7.2551 per dollar
Cryptocurrencies
Bitcoin rose 1.5% to $89,999.01
Ether rose 2.2% to $3,223.25
Bond
Commodity
West Texas Intermediate crude fell 0.5% to $68.09 a barrel
Spot gold fell 0.5% to $2,560.08 an ounce
This story was produced with the help of Bloomberg Automation.
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