Asian Shares Muted Before Fed, Chinese Stocks Drop: Markets Wrap

(Bloomberg) — Asian stocks were mixed as investors awaited clues on the Federal Reserve’s policy path in its final interest-rate decision of the year.

Chinese equities fell after a government report showed inflation edged higher in November, damping expectations for lower interest rates. Shares also edged lower in Japan, while they rose in Taiwan. Silver extended gains after rising to a record, while Australian bonds added to their selloff following this week’s hawkish central bank decision.

Traders are anticipating a third consecutive Fed rate cut Wednesday, while the focus will be on the central bank’s latest dot plot, economic projections and comments from Chair Jerome Powell. Volatility around the decision has been among the defining characteristics of equity trading in the past six weeks, superseding concern about a potential AI bubble and the impact of President Donald Trump’s trade policies.

“Asian equities are drifting in light red as investors brace for one of the most ‘known-yet-unknown’ final Fed packages of the year,” said Hebe Chen, an analyst at Vantage Markets in Melbourne. “With a 25 basis-point cut widely viewed as locked in, the real swing factor will be the Fed’s economic projections, unusually delivered without a full quarter of verified data — leaving a wide runway for interpretation and volatility.”

China’s stocks have been losing steam after a stellar run earlier this year, dragged down by concerns over valuations, weak economic data and lack of stimulus signals from government leaders. The MSCI China Index is now about 1.4% away from entering a technical correction.

Chinese retail stocks bucked the trend after Beijing called for prioritizing the industry as a key driver to boosting domestic demand. Retail should be prioritized as a key driver for building a robust domestic demand system and strengthening the domestic economic cycle, Vice Commerce Minister Sheng Qiuping said at a briefing. Yonghui Superstores and Fujian Dongbai Group both rose by the 10% daily limit.

Silver extended its rally after breaking above $60 an ounce for the first time on Tuesday, with momentum coming from supply tightness and bets on further monetary easing by the Fed. The white metal rose as much as 1.3% to a record $61.4797 an ounce on Wednesday.

“Silver has a big retail and speculative base,” said David Wilson, director of commodities strategy at BNP Paribas SA. “Once you have an upside momentum, it tends to bring in more money.”

Australia’s three-year note yield rose as much as seven basis points to 4.21%, the highest since November 2024. The yield had jumped 10 basis points on Tuesday when central bank Governor Michele Bullock called an end to a truncated easing cycle as policymakers gauge whether a pickup in inflation requires an extended interest-rate pause or a switch to tightening.

Global bond yields have risen to highs last seen in 2009 ahead of a key Federal Reserve policy meeting, signaling concerns that interest-rate cutting cycles from the US to Australia may be ending soon.

US Treasuries were little changed after dropping Tuesday when data showed October job openings increased to the highest level in five months. The Fed’s two previous cuts this year were intended to address weakening employment conditions, including a rise in the unemployment rate to nearly 4.5%.

Kevin Hassett, the frontrunner in Trump’s search to replace Powell, said on Tuesday that he sees plenty of room to substantially lower rates, even more than a quarter-point cut.

Another Fed rate cut is seen as further eroding the options for investors who are looking for healthy income levels. In recent years, investors were paid handsomely to play it safe. Short-term US Treasuries offered yields above 5% — a rare chance to earn solid returns without locking up capital or chasing risk.

The Fed’s expected cut is a reminder that “today’s yields may not always be available,” said James Turner, co-head of global fixed income for EMEA at BlackRock in London. Pension and insurer clients are looking toward high yield, emerging-market debt, AAA rated collateralized loan obligations and securitization investments, to “enhance income and diversify,” he said

Oil held the biggest two-day drop in a month as concerns about global oversupply continued to weigh on sentiment.

Corporate News:

China Vanke Co. creditors are set to meet Wednesday as the distressed developer makes one more push to win support for a bond extension plan aimed at averting a default. SpaceX is moving ahead with plans for an initial public offering that would seek to raise significantly more than $30 billion, people familiar with the matter said, in a transaction that would make it the biggest listing of all time. Major investors in First Brands Group have offloaded stakes in the bankrupt auto supplier’s debt in recent days, causing the value of its most senior loan to collapse and prompting it to pull forward a lender call to calm nerves. Parkview Group Ltd. has secured a $940 million loan refinancing deal backed by a key Beijing asset, according to people familiar with the matter, ending a months-long saga that had weighed on the Hong Kong developer amid China’s prolonged property crisis. Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 2:17 p.m. Tokyo time Nikkei 225 futures (OSE) fell 0.9% Japan’s Topix was little changed Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng fell 0.6% The Shanghai Composite fell 0.8% Euro Stoxx 50 futures fell 0.2% Currencies

The Bloomberg Dollar Spot Index was little changed The euro was unchanged at $1.1627 The Japanese yen rose 0.2% to 156.61 per dollar The offshore yuan was little changed at 7.0598 per dollar Cryptocurrencies

Bitcoin was little changed at $92,702.64 Ether rose 0.9% to $3,331.42 Bonds

The yield on 10-year Treasuries was little changed at 4.18% Japan’s 10-year yield was unchanged at 1.955% Australia’s 10-year yield advanced four basis points to 4.80% Commodities

West Texas Intermediate crude rose 0.1% to $58.31 a barrel Spot gold fell 0.1% to $4,202.76 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Michael G. Wilson.

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