(Bloomberg) — Chinese shares in Hong Kong fell after investors paused their global rally of the past month. Japanese shares rose on a weaker yen, while oil rose for a third day on tensions in the Middle East.
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A gauge of Hong Kong-listed Chinese companies fell as much as 4.9%, halting a 13-day rally fueled by optimism over measures to stimulate the world’s second-largest economy. The Hang Seng Index fell as much as 4.5%, the biggest intraday decline in almost two years. Markets in mainland China remain closed for Golden Week. US and European stock futures fell.
There is some “profit taking as stimulus momentum has stalled with China on holiday,” said Charu Chanana, global market strategist at Saxo Markets. “Markets still remain uncertain about the impact of the announcements to address China’s structural headwinds.”
Japanese shares rose, with the Topix index rising more than 1% after new Prime Minister Shigeru Ishiba said on Wednesday the economy is not ready for another rate hike, sending the yen lower. The Japanese currency fell 0.2% to 146.78 per dollar on Thursday, after falling 2% the day before.
The dollar’s renewed strength added to pressure on the yen, as stronger-than-expected ADP jobs data prompted traders to trim their bets on aggressive rate cuts by the Federal Reserve. Swap traders expected about 33 basis points of policy easing at the central bank meeting in November, down from 44 basis points last week.
Last week, China’s central bank announced stimulus measures in an effort to achieve this year’s economic growth target. China’s CSI 300 Index officially entered a bull market on Monday before closing for a weeklong holiday.
Global stocks are on track for their first weekly loss in four weeks amid continued threats of an escalation of geopolitical tensions in the Middle East and speculation over the pace of the Fed’s monetary policy easing. Investors will focus on Friday’s nonfarm payrolls data to further gauge the size of the Fed’s next rate cut.
Oil rose as investors waited for Israel’s response to Iran’s missile attack, with US President Joe Biden urging Israel to refrain from attacking Iran’s nuclear facilities.
Bloomberg’s dollar index gained for a fourth day, buoyed by rising government bond yields. U.S. 10-year yields rose one basis point to 3.79% in Asian trading, after rising five basis points in New York amid a flare-up of tensions in the Middle East.
“After the initial unrest due to geopolitical risks in the Middle East, Asian markets managed to regain some calm during today’s session,” said Jun Rong Yeap, market strategist at IG Asia Pte. “The question has been how aggressive Israel’s response will be and whether energy infrastructure will be affected, but it is expected that further clarity could take some time,” he said.
Main events this week:
Some of the major moves in the markets:
Stocks
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S&P 500 futures fell 0.2% as of 2:06 p.m. Tokyo time
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Nikkei 225 futures (OSE) rose 2.3%
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Japan’s Topix rose 1.2%
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Australia’s S&P/ASX 200 was little changed
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Hong Kong’s Hang Seng fell 2.6%
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Euro Stoxx 50 futures fell 0.6%
Currencies
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The Bloomberg Dollar Spot Index rose 0.2%
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The euro fell 0.1% to $1.1031
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The Japanese yen fell 0.2% to 146.73 per dollar
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The offshore yuan fell 0.2% to 7.0478 per dollar
Cryptocurrencies
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Bitcoin rose 0.6% to $61,244.35
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Ether rose 0.3% to $2,393.24
Bonds
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The yield on ten-year government bonds rose by one basis point to 3.79%
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Japan’s 10-year yield was little changed at 0.815%
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Australian ten-year yields rose six basis points to 4.02%
Raw materials
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West Texas Intermediate crude rose 1.3% to $71.03 a barrel
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Gold fell 0.1% to $2,655.84 an ounce
This story was produced with the help of Bloomberg Automation.
–With help from Winnie Hsu and John Cheng.
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