Asian Stocks Fall in Busy Week for Policymakers: Markets Wrap

(Bloomberg) — Stocks fell as traders took risk off the table ahead of a raft of policy decisions this week from the US, the UK and Japan. 

Societe Generale SA slumped as much as 7.6% and was among the biggest drags on Europe’s Stoxx 600 Index after the Paris-based lender’s strategic plan included cuts to revenue and profitability targets. US equity futures signaled a slight rebound from Friday’s declines on Wall Street.

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Brent crude oil pushed toward $95 a barrel, highlighting inflationary pressures just as policymakers at key central banks prepare for their interest-rate meetings. The Federal Reserve’s announcement on Wednesday will be followed by those from the Bank of England on Thursday and the Bank of Japan a day later. 

US Treasury yields ticked higher, with the policy-sensitive two-year rate above 5%. 

Monday’s subdued mood in stock markets matched the tone of a note from Morgan Stanley strategists, who said investors have turned more cautious. The team led by Michael Wilson said there’s a growing debate among clients about whether a recession has been avoided or just delayed.

“The majority of investors we’ve spoken with are in the ‘pushed out’ camp and are of the view that 2024 is now looking like a more challenging year for risk assets relative to 2023,” Wilson wrote in a note.

On the outlook for oil, traders will be monitoring clues on prospects for global supply when Saudi Energy Minister Prince Abdulaziz bin Salman addresses an industry conference later Monday. Hedge funds last week boosted their bullish wagers on Brent and US crude to a 15-month high.

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Among currencies, the dollar weakened against most of its G-10 peers. 

Fed Outlook 

US inflation expectations fell to the lowest in more than two years as consumers grew more optimistic about the economic outlook, data showed Friday. A measure of New York state factory activity unexpectedly expanded amid new orders.

A resilient US economy will prompt the Fed to pencil in one more interest-rate hike this year and stay at the peak level next year for longer than previously expected, according to economists surveyed by Bloomberg News.

“A number of Fed speakers have taken a slightly more cautious tone recently, mentioning that risks have become more two-sided and talking of the ability to ‘proceed carefully,’” said Credit Agricole strategists led by Jean-François Paren. “That said, it is far too early to declare victory, and the Fed will want to keep the possibility of further tightening on the table.”

In Asia, a gauge of the region’s shares fell, dragged down by tech names. Hong Kong’s Hang Seng Index slipped 1.4%, while China’s CSI 300 Index erased losses as traders drew support from data last week that pointed to signs of stabilization. 

Elsewhere, Chevron Corp. resumed full production from a liquefied natural gas export facility in Australia that suffered a fault last week, even as union members continued strikes at the site. That took some pressure off natural gas prices.

Key events this week:

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Some of the main moves in markets:

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Robert Brand and Sagarika Jaisinghani.