HONG KONG — Asian stocks experienced mixed results on Monday, with several major markets closed for a holiday, following a strong week in the U.S. where stocks approached record highs.
Hong Kong’s Hang Seng Index fell by 0.3% to 17,312.37, reacting to recent data indicating a slowdown in China’s economy for August. Key indicators such as factory output, retail sales, and investment figures did not meet expectations, and the unemployment rate unexpectedly climbed to a six-month high, raising concerns regarding economic stability.
Experts suggest that decisive action from China’s leadership is crucial as the indicators point towards a deepening economic slowdown.
Meanwhile, Australia’s S&P/ASX 200 recorded a modest gain of 0.4%, reaching 8,133.40.
With Japan, mainland China, and South Korea markets closed for a public holiday, investors are eagerly awaiting the Federal Reserve’s policy meeting scheduled for Tuesday and Wednesday. The central bank is widely anticipated to announce its first interest rate cut since 2020. Additionally, the Bank of Japan’s forthcoming policy meeting later this week is expected to maintain current rates.
In the currency markets, the Japanese yen gained strength against the U.S. dollar, which decreased to 140.53 yen from 140.82 yen. The euro rose slightly to $1.1092 from $1.1076.
U.S. futures and oil prices showed positive movements.
Last Friday, the S&P 500 increased by 0.5% to 5,626.02, achieving five consecutive gains and approaching its all-time high from July. Strong performances from major technology stocks like Microsoft and Broadcom contributed to recovering losses from the previous week.
The Dow Jones Industrial Average also saw a rise of 0.7%, closing at 41,393.78, while the Nasdaq composite gained 0.7%, ending at 17,683.98.
Market support was bolstered as Treasury yields softened ahead of the Fed meeting. There is a unanimous expectation on Wall Street for a reduction in interest rates for the first time in over four years, with traders anticipating a potential larger-than-usual cut.
The Federal Reserve has maintained its main interest rate at a two-decade high as a measure to slow inflation. With inflation decreasing from its peak levels, analysts suggest a shift in focus toward supporting the sluggish job market and overall economy.
Determining the extent of the rate cut poses a challenge for the Fed, as lower rates could ease economic pressure but may also fuel inflation. Recent reports indicate lingering upward pressure on inflation, initially tempering expectations for the Fed’s move.
As of last Friday, market perspectives showed roughly a 50% probability that the Fed might implement a significant half-percentage-point cut, rather than the more typical quarter-point decrease. Currently, the federal funds rate is set between 5.25% and 5.50%.
The yield on the 10-year Treasury note dipped to 3.65% from 3.68%, while the two-year yield—reflecting Fed action expectations—dropped more significantly to 3.58% from 3.65%.
In energy trading, benchmark U.S. crude rose by 22 cents, reaching $67.97 per barrel, while Brent crude experienced a minor increase of 16 cents to $71.77 per barrel.
