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Asian stocks fall as Chinese stimulus disappoints; Bitcoin Extends Record Rally

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Asian stocks fall as Chinese stimulus disappoints; Bitcoin Extends Record Rally

By Kevin Buckland

TOKYO (Reuters) – Hong Kong shares led falls in Asia on Monday after Beijing’s latest stimulus measures fell short of investor expectations, eclipsing Wall Street’s record highs on Friday and futures point to further strength in the reopening.

Bitcoin climbed to an all-time high as Donald Trump’s victory in the US presidential election, along with pro-crypto candidates voted into Congress, boosted expectations of a light-handed regulatory environment.

The dollar was trading close to last week’s four-month high against major peers as traders prepared for a key reading on U.S. consumer inflation this week, as well as a parade of Federal Reserve speakers including Chairman Jerome Powell on Thursday.

Hong Kong’s Hang Seng fell 2.5% as of 0200 GMT, while a sub-index of property shares in mainland China plunged 3.9%. Chinese blue chips weakened 0.3%.

Japan’s Nikkei fell 0.3%. South Korea’s Kospi lost 0.9% and the Taiwanese benchmark fell 0.7%.

Australia’s stock benchmark fell 0.4%, pressured by commodity stocks, after oil and industrial metals weakened.

On Friday, after Chinese markets closed, the Standing Committee of the National People’s Congress unveiled a 10 trillion yuan ($1.39 trillion) debt package to ease local government financing problems and stabilize weak economic growth.

However, the stimulus measures lacked the direct injection of money into the economy that some investors had hoped for, especially against the backdrop of the threat of massive tariffs under the incoming Trump administration.

“It may be disappointing for those who expected the NPC meeting to approve a major budget package, but the expectation is unrealistic because the policy goal is to achieve the GDP growth target and reduce tail risks, not to to restructure the economy in a meaningful way. way,” Macquarie analysts wrote in a note.

“Chinese policy will also only respond to its own economic conditions, and not to the American election results.”

However, the stimulus disappointment overshadowed what should have been a positive lead from Wall Street, where the S&P 500 rose above 6,000 points for the first time before closing at a record slightly below that level.

S&P 500 futures were 0.2% higher on Monday.

The Republican Party is moving closer to capturing both chambers of Congress, taking the Senate on election night and Edison Research expects it to have 214 seats so far of the 218 seats needed for control of the House of Representatives , compared to 205 for Democrats.

Investors expect Trump’s second term to bring tax cuts that boost stock markets and looser regulations.

Bitcoin, another prominent “Trump trade,” extended its record run, marking a new all-time high of $81,756.

Trump has promised to make the United States “the crypto capital of the planet.”

The dollar index, which measures the currency against six major peers, was steady at 105.01 after Friday’s 0.55% rise.

Traders will keep an eye on consumer price data on Wednesday to see if it could hamper the chances of a rate cut at the next meeting in December.

According to CME Group’s FedWatch Tool, markets are currently predicting about a 65% chance of a quarter-point cut on December 18.

The dollar rose 0.5% to 153.39 yen, reversing some of Friday’s weakness as the pair followed long-term U.S. Treasury yields lower.

Minutes of the Bank of Japan’s October policy meetings showed officials divided over how quickly they could raise rates again, although the market reaction was muted.

The U.S. bond markets are closed Monday for Veterans Day, although Wall Street is open.

The euro held steady at $1.0721, not far from a four-month low. Political uncertainty remained an obstacle as German Chancellor Olaf Scholz said he would be prepared to vote a vote of confidence before Christmas, paving the way for early elections after the collapse of his governing coalition.

Sterling was little changed at $1.2922.

Gold fell 0.5% to $2,669.69 an ounce, falling further from last month’s record high of $2,790.15.

Base metals in Shanghai fell, with the most traded copper contract on the Shanghai Futures Exchange (SHFE) down 0.9% to 76,570 yuan per tonne in December.

Oil prices continued their decline from Friday, when Brent and West Texas Intermediate (WTI) fell more than 2% each. On Monday, Brent futures fell 0.3% to $73.68 per barrel, while US WTI futures lost 0.4% to $70.13 per barrel.

($1 = 7.1787 Chinese Yuan Renminbi)

(Reporting by Kevin Buckland; Editing by Shri Navaratnam)

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