Asian shares saw a decline and the dollar remained firm as investors looked ahead to a week filled with central bank meetings, including those of the Federal Reserve and the Bank of Japan. These meetings are expected to be closely examined for insights into the global monetary policy outlook.
Asian stock markets were affected by this anticipation, with Australia’s resources-heavy market falling by 0.7% and Hong Kong’s Hang Seng index dropping 0.7%. Meanwhile, Japan’s Nikkei was closed for a holiday.
The focus in the Asian market shifted to Chinese property developers listed in Hong Kong, as shares tumbled by 2%. This was due to China Evergrande Group experiencing a 20% plunge after some staff at its wealth management unit were detained by the police in southern China. Additionally, Chinese trust firm Zhongrong International Trust Co announced that it was unable to make timely payments on some trust products with exposure to Chinese property developers.
Last week, Asia experienced an improvement in sentiment after news of increased policy support from Beijing and better-than-expected Chinese economic data, which suggested that the second-largest economy in the world may be stabilizing from its months-long slowdown.
This week, global central banks will take center stage, with five of the ten most heavily traded currencies overseen by these banks holding rate-setting meetings. The U.S. Federal Reserve is expected to pause on Wednesday, with the focus shifting to updated economic and rates projections, as well as the comments of Chair Jerome Powell about the future. Markets are currently predicting 80 basis points of cuts for next year.
On Thursday, the Bank of England is expected to hike for the 15th time, raising benchmark borrowing costs to 5.5%, while Sweden’s Riksbank is anticipated to increase rates by 25 basis points to 4%. The Bank of Japan’s meeting on Friday is a key event of risk, as investors will be looking for any indications that the bank may move away from its ultra-loose policy faster than previously anticipated.
The U.S. dollar remained strong and near its six-month high against a basket of major currencies. Oil prices also rose, with Brent crude futures at $94.20 per barrel and U.S. West Texas Intermediate crude futures at $91.14 per barrel. Gold prices saw a 0.2% increase, reaching $1,925.62 per ounce.
Sources:
– Reuters