Asian Shares Decline, Bitcoin’s Advance in Focus: Markets Wrap
(Bloomberg) — Asian shares edged lower as investors looked ahead to a pivotal week of US economic data and earnings from AI bellwether Nvidia Corp., both expected to set the tone for markets.
The MSCI Asia Pacific Index wiped out earlier gains and fell 0.3%, with almost two stocks declining for every one that gained. A gauge of technology firms advanced, while the Nikkei 225 gauge fell 0.7% after Japan’s economy contracted for the first time in six quarters. Japanese tourism and retail-related stocks slumped amid tensions between China and Japan.
After a lackluster Friday session, risk appetite perked up as US equity-index futures advanced — S&P 500 contracts gained 0.4% and Nasdaq 100 futures rose 0.6%. Sentiment also brightened among cryptocurrencies, with Bitcoin climbing 1.6%, after having wiped out its gains for the year.
After weeks of a data blackout, investors are set to receive long-awaited readings on the strength of the US economy as government agencies resume releasing key indicators, including employment figures. The data will offer crucial insight into the Federal Reserve’s policy trajectory, even as traders contend with other forces such as elevated valuations in AI-linked equities.
“November so far has seen a pretty wobbly ride for shares,” Shane Oliver, chief economist and head of investment strategy at AMP Ltd., wrote in a note to clients. “Share markets remain at risk of a correction given stretched valuations, risks around US tariffs and the softening US jobs market.”
The lofty AI valuations face a crucial test this week as investors look into Nvidia’s earnings on Wednesday to assess whether its soaring price tag is sustainable. The company’s stock has surged 42% this year, eclipsing returns in the S&P 500 and Nasdaq 100 indexes.
Another key factor for the week is the release of economic data that will provide clues on the Fed’s outlook.
A slew of Fed officials have expressed skepticism over the need for a cut in December, or outright opposed one, less than a month after Chair Jerome Powell warned that a December cut is far from a “foregone conclusion.”
The Fed will also release minutes from its Oct. 28-29 meeting, shedding light on an unusual split among policymakers after the FOMC cut rates by a quarter point.
Last week, traders pushed the odds of a quarter-point rate cut in December below 50% as some Fed officials indicated that such a move is far from a sure thing.
“I do believe that the Fed still has the potential to cut in December, but that brings volatility,” said Adrian Zuercher, co-head of Global Asset Allocation at UBS Global Wealth Management, in a Bloomberg TV interview. “But overall, I do think markets are quite healthy and could actually go further up from here.”
What Bloomberg strategists say…
Bitcoin’s slump has the potential to get significantly worse if it extends much further. That’s because the token is trading perilously close to the point when the average retail investor would be facing losses, a dynamic that threatens to turn ETF flows into a fundamental downside driver rather than the steady tailwind they once provided.
— Garfield Reynolds, MLIV Team Leader. For full analysis, click here.
Attention is also on the cryptocurrencies market. Just a little more than a month after reaching an all-time high, Bitcoin erased the more than 30% gain registered since the start of the year as exuberance over the pro-crypto stance of the Trump administration fades. The token advanced 1.5% to trade around $95,000 on Monday.
In Japan, the economic contraction over the summer will support Prime Minister Sanae Takaichi’s case to compile an ambitious stimulus package, even as the central bank stays on track for a rate hike in coming months.
Goldman Sachs Group Inc. sees a return of Japan’s fiscal risk premium as investors grow wary of a larger-than-expected stimulus package, putting pressure on longer-maturity sovereign bonds and the yen.
Among commodities, oil dropped following signs that activity had resumed at the key Russian port of Novorossiysk on the Black Sea, after a Ukrainian strike last week led to some damage and a suspension of operations.
Also, President Donald Trump said a proposed Senate legislation to sanction countries conducting business with Russia would be “okay with me,” his strongest indication yet that he would support a monthslong push to strangle Moscow’s funding.
Corporate News:
US airlines will be able to resume normal operations starting Monday after more than a week of government-mandated flight reductions. Samsung Group and SK Group were among four of South Korea’s biggest companies that pledged to invest about $550 billion in the country after meeting with President Lee Jae Myung. A White House national security memo claimed Alibaba Group Holding Ltd. provided the Chinese military with technology support against targets in the US, the Financial Times reported. Boeing Co. said it will ensure its factories are ready to absorb a higher rate of aircraft output before lifting the tempo again next year. Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.4% as of 11:54 a.m. Tokyo time Japan’s Topix fell 0.8% Australia’s S&P/ASX 200 fell 0.2% Hong Kong’s Hang Seng fell 0.4% The Shanghai Composite fell 0.3% Euro Stoxx 50 futures fell 0.2% Currencies
The Bloomberg Dollar Spot Index rose 0.1% The euro fell 0.2% to $1.1603 The Japanese yen was little changed at 154.67 per dollar The offshore yuan was little changed at 7.1051 per dollar Cryptocurrencies
Bitcoin rose 1.6% to $94,911.17 Ether rose 2.4% to $3,145.37 Bonds
The yield on 10-year Treasuries was little changed at 4.14% Japan’s 10-year yield advanced one basis point to 1.715% Australia’s 10-year yield advanced four basis points to 4.48% Commodities
West Texas Intermediate crude fell 1% to $59.48 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Abhishek Vishnoi and Masaki Kondo.
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