(Bloomberg) — Asian stocks fell after China’s planned debt swap program appeared inadequate to some investors and data showed continuing deflationary pressures.
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The region’s stock index fell more than 1% on Monday, with Hong Kong and mainland Chinese stocks falling in early trading. Standards have also fallen in South Korea and Australia. US futures rose after the S&P 500 rose 0.4% on Friday.
The broad weakness reflects ongoing concerns about the outlook for the world’s second-largest economy, after Beijing unveiled a 10 trillion yuan ($1.4 trillion) program to defuse local government debt risks but stopped short of unleashing new fiscal stimulus. In addition to anemic inflation, sentiment toward China is also faltering as foreign direct investment continues to decline.
Investors had been hoping for more aggressive stimulus measures that would boost demand straight from a key Chinese legislature meeting last week, especially after Donald Trump’s presidential victory sparked uncertainty over tariffs. For many economists, Beijing’s stance signals an intention to maintain space to better respond to a potential trade war when Trump takes office next year.
“I feel like there’s a lot behind the stimulus and I think the market right now is facing a very negative reaction,” Andy Maynard, head of equities at China Renaissance Securities, told Bloomberg TV. “I still think, from a volatility standpoint, we’re not far out of the woods yet.”
UBS lowered its 2025 growth forecast for China after Trump’s election, anticipating an expansion of “about 4%” for 2025, and a “much slower” pace in 2026.
Elsewhere, bitcoin rose above $81,000 for the first time, driven by the incoming president’s support for digital assets and the election of pro-crypto lawmakers.
Oil fell for a second day as the weak outlook for China, the largest importer, continued to weigh on the market, while iron ore fell towards $100 per ton.
The dollar was broadly stable. The yen fell 0.5% against the US dollar, ahead of a Japanese parliament vote later Monday that is likely to keep Prime Minister Shigeru Ishiba in office despite the national election setback.
Minneapolis Federal Reserve Bank President Neel Kashkari signaled over the weekend that the central bank may ease interest rates less than previously expected amid a strong US economy. However, Kashkari stressed that it is too early to determine the impact of Trump’s policies.
“The market’s next move will depend on whether Trump prioritizes tax cuts or tariff increases, each with a vastly different impact,” Tony Sycamore, an analyst at IG Markets in Sydney, wrote in a note. “That clarification may still be months away, and it’s worth noting that in 2016, Trump’s first move was to cut taxes, sending stock markets higher before tariffs on China caused headwinds.”
This week traders will analyze data from Australian jobs to Chinese retail sales and industrial production, inflation from the US and Eurozone as well as growth readings from the UK and Japan. A group of Federal Reserve officials are scheduled to speak, which could help indicate the central bank’s thinking after the election result.
Main events this week:
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Japanese current account, Monday
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Consumer price index in Denmark, Monday
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Norwegian Consumer Price Index, Monday
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The United Nations climate change conference, COP29, begins Monday
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German Consumer Price Index, Tuesday
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UK Unemployment Claims, Unemployment, Tuesday
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Fed speakers including Christopher Waller, Tuesday
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Japanese Producer Price Index, Wednesday
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Industrial production in the eurozone, Wednesday
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US Consumer Price Index, Wednesday
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Unemployment in Australia, Thursday
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Eurozone GDP, Thursday
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US Producer Price Index, Unemployment Claims, Thursday
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Reserve Bank of Australia Governor Michelle Bullock speaks on Thursday
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Federal Reserve Chairman Jerome Powell speaks Thursday
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European Central Bank President Christine Lagarde speaks on Thursday
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Bank of England Governor Andrew Bailey speaks on Thursday
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Japanese GDP, Industrial Production, Friday
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China retail sales, industrial production, and fixed asset investment, Friday
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UK GDP, industrial production, trade balance, Friday
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US retail sales, Friday
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Alibaba earnings Friday
Some key movements in the markets:
Stocks
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S&P 500 futures rose 0.2% as of 9:10 a.m. Tokyo time
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Hang Seng futures fell 1.6%
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Japan’s Topix index rose 0.3%.
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Australia’s S&P/ASX 200 index fell 0.3%.
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Euro Stoxx 50 futures fell 1%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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There was little change in the euro at $1.0711
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The Japanese yen fell 0.3 percent to 153.05 yen to the dollar
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There was no significant change in the yuan in external transactions at 7.2003 to the dollar
Cryptocurrencies
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Bitcoin rose 0.7% to $80,526.62
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Ethereum rose 0.5% to $3,187.07
Bonds
Goods
This story was produced with assistance from Bloomberg Automation.
–With assistance from John Cheng.
(An earlier version of this article corrected the currency conversion in the second paragraph.)
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