Asian Stocks Edge Lower, RBA Decision Awaited: Markets Wrap

Article content

(Bloomberg) — Asian stocks crept lower ahead of the Reserve Bank of Australia’s policy decision after defense-related stocks spurred a rally in European shares on Monday.

Article content

Article content

Japanese and South Korean equity indexes traded in a tight range, while those in Australia declined. Futures pointed to gain in Hong Kong and an advance in US benchmarks after a holiday on Monday. 

Article content

Investors in Asia will also focus on how China’s tech-powered rally fares after DeepSeek’s breakthrough in artificial intelligence drove a rally of more than $1 trillion in the country’s shares. The optimism around a revival in China’s economy was boosted Monday after a meeting between President Xi Jinping and business figures, including Alibaba Group Holding Ltd. co-founder Jack Ma, spurred optimism that a years-long crackdown on the private sector is ending. 

“We see some positive implications from the highly discussed meeting between President Xi and leading industry executives,” Citigroup analyst Alicia Yap wrote in a note. “The decision to call for such a meeting likely indicates the importance of technology innovation and the contribution of private enterprises to the development and growth of China’s economy.”

Xi’s meeting drew many of the biggest names in Chinese business over the past decade, representing industries from chipmaking and electric vehicles to AI. The summit demonstrated Beijing’s softer stance toward the companies that fuel most of economy, just as Washington ramps up a potentially debilitating campaign of global tariffs.

Article content

Article content

Elsewhere, the US asked European nations to spell out what security guarantees and equipment they can offer Ukraine to ensure a lasting peace settlement. European officials say they are working on a major package to ramp up defense spending and some EU leaders are meeting in Paris to draw up their response. 

“The goalposts are shifting, and the EU is realizing they can rely less and less on the US for protecting their borders,” said Aneeka Gupta, head of macro research at WisdomTree UK Ltd. “In lockstep, we’re going to have to see European countries spend more on defense. That does warrant a bit more caution on bonds.”

The developments have cemented the view that debt sales will need to increase as European nations shoulder the cost of a lasting peace deal between Ukraine and Russia. Upgrading defense and protecting Ukraine may cost Europe’s major powers an additional $3.1 trillion over 10 years, according to Bloomberg Economics estimates.

The Australian dollar held near a two-month high before a central bank meeting that’s expected to see the first rate cut in four years. However, a strong labor market, resilient consumer spending, robust credit growth and a weaker currency could make the case for a hold, said Bloomberg Economics economist James McIntyre. 

Article content

Meanwhile, BHP Group Ltd.’smxap first-half profit slumped 23% in results released early Tuesday, as the world’s biggest public miner said it was impacted by falling Chinese demand for key commodities including iron ore and copper.

Federal Reserve Governor Christopher Waller said recent economic data support keeping US interest rates on hold, but if inflation behaves as it did in 2024, policymakers can get back to cutting “at some point this year.”

Some of the key events this week: 

• Australia rate decision, Tuesday
• Singapore budget, Tuesday
• UK jobless claims, unemployment, Tuesday
• Bank of England Governor Andrew Bailey speaks, Tuesday
• Canada CPI, Tuesday
• New Zealand rate decision, Wednesday
• Indonesia rate decision, Wednesday
• UK CPI, Wednesday
• South Africa CPI, retail sales, Wednesday
• US FOMC minutes, housing starts, Wednesday
• Australia unemployment, Thursday
• China loan prime rates, Thursday
• Eurozone consumer confidence, Thursday
• G-20 foreign ministers meet in South Africa, Thursday – Friday
• Reserve Bank of Australia Governor Michele Bullock and officials testify to parliamentary committee, Friday
• Japan CPI, Friday
• Eurozone HCOB manufacturing & services PMI, Friday
• UK S&P Global manufacturing & services PMI, Friday
• US S&P Global manufacturing & services PMI, Friday
• Bank of Canada Governor Tiff Macklem speaks, Friday

Article content

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.1% as of 9:06 a.m. Tokyo time
• Hang Seng futures rose 0.3%
• Japan’s Topix rose 0.4%
• Australia’s S&P/ASX 200 fell 0.4%
• Euro Stoxx 50 futures rose 0.6%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0485
• The Japanese yen was little changed at 151.56 per dollar
• The offshore yuan was little changed at 7.2656 per dollar

Cryptocurrencies

• Bitcoin fell 0.5% to $95,953.96
• Ether fell 1% to $2,749.82

Bonds

• The yield on 10-year Treasuries advanced two basis points to 4.49%
• Japan’s 10-year yield advanced 3.5 basis points to 1.385%
• Australia’s 10-year yield declined two basis points to 4.43%

Commodities

• West Texas Intermediate crude rose 0.7% to $71.25 a barrel
• Spot gold rose 0.1% to $2,899.59 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Sujata Rao and Rob Verdonck.

Article content