Asian equities faced a mixed performance on Thursday, with Chinese stocks lagging behind as investors awaited further signs of stimulus measures from Beijing ahead of a crucial economic meeting next month. Both Hong Kong and mainland China saw declines, while stocks in Australia managed gains. In Japan, semiconductor-related stocks surged following reports that the U.S. might implement less stringent restrictions on chip and AI memory semiconductor sales to China. U.S. equity futures also rose in early trading.
China’s Central Economic Work Conference, typically held in December, is a key event where policymakers outline their economic strategy for the upcoming year, including monetary and fiscal policies. The upcoming meeting is generating anticipation among investors, who are hoping for additional support measures to stimulate growth. However, the threat of further U.S. sanctions looms large, continuing to strain already fragile trade relations between the two countries. These concerns are weighing on the broader region, with Asian stocks on track for their first consecutive monthly losses of the year, driven by a stronger dollar and growing trade tensions.
Despite the potential for new stimulus measures from Beijing, concerns about the economy are mounting. “There are increased concerns and frustrations,” noted Winnie Wu, a China equity strategist at Bank of America Securities, in an interview with Bloomberg Television. The prospect of U.S. tariffs on Chinese goods, coupled with hopes for fiscal support from Beijing, has investors focusing on the short term. “Even long-term investors are now concentrating on the next few months, or even weeks,” Wu added.
In Australia and New Zealand, bond yields fell in line with moves in U.S. Treasuries, as investors sought the safety of U.S. government debt, pushing 10-year yields lower. U.S. Treasuries were not actively traded in Asia on Thursday due to the Thanksgiving holiday in the U.S.
The Federal Reserve’s preferred inflation measure showed a slight uptick, reinforcing the central bank’s cautious approach to further interest rate cuts. Market participants are also digesting the potential economic impact of President-elect Donald Trump’s policy decisions, which could lead to further inflationary pressures.
“The lack of an upside surprise in the latest U.S. inflation data has led traders to bet more heavily on a 25 basis point Fed rate cut in December,” said Jun Rong Yeap, a market strategist at IG Asia. “This provides more clarity compared to the uncertain rate outlook just a week ago,” he added.
In the currency markets, the Japanese yen weakened on Thursday, following a strong rally the previous day, which had driven it to its strongest level since late October. The yen’s reversal came amid growing speculation that the Bank of Japan may raise interest rates in its upcoming December meeting. Japan’s cabinet is also expected to approve an additional $92 billion budget to finance Prime Minister Shigeru Ishiba’s stimulus package, according to state broadcaster NHK.
Despite this, the yen remains vulnerable to further weakness. “The yen is unlikely to remain below 150 for any sustained period due to the continued interest rate differential that favors the dollar,” said Win Thin, global head of market strategy at Brown Brothers Harriman & Co.
Elsewhere, the Mexican peso strengthened after President-elect Donald Trump held talks with Mexico’s President Claudia Sheinbaum. Meanwhile, South Korea’s won weakened after the Bank of Korea unexpectedly cut its key interest rate by 25 basis points to 3% to support the economy.
In commodities, gold and silver prices fell, while oil prices remained stable as OPEC+ was expected to delay a planned production restart. Meanwhile, Bitcoin traded around $96,000 after a strong rally on Wednesday.
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