Asian Stocks Slip With Korea, Middle East in Focus: Markets Wrap

(Bloomberg) — A shift in China’s monetary stance provided a welcome boost for markets at the start of a week set to be dominated by political upheaval from the Middle East to South Korea and France, as well interest-rate decisions from major central banks.

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China’s top leaders announced they will embrace a “moderately loose” strategy next year, in a sign of greater easing ahead that will likely be hailed by investors hungry for more stimulus. All eyes are now on the Central Economic Work Conference due to start on Wednesday, for signals of more fiscal support. An index of Asian stocks advanced, with Hong Kong’s benchmark jumping 2.8%. The offshore yuan erased losses to trade 0.1% stronger.

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“The somewhat looser monetary policy stance by the Politburo is welcome news, though it won’t materially change the situation for the Chinese economy,” said Joachim Klement, head of strategy, economics and ESG at Panmure Liberum. “What is needed is substantially more fiscal stimulus that is supported by a looser monetary policy.”

Europe’s Stoxx 600 benchmark pared an early advance but remained on track for an eighth straight day of gains, the longest streak since May, as investors position for another rate cut by the European Central Bank. Sectors exposed to China like miners and consumer products led the advance, with the basic resources sub-index up 2.6%. US equity futures edged higher. Treasury yields and the dollar were steady. 

ECB policymakers will set interest rates in Frankfurt this week for the first time since governments in Paris and Berlin both collapsed over budget talks. In addition to the ECB, the Bank of Canada and Swiss National Bank are expected to ease policy, while Australia’s central bank will likely keep its key interest rate on hold amid indications the nation’s economy is beginning to soften.

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Crude oil rose after the toppling of President Bashar al-Assad’s regime unsettled an already restive Middle East. Investors are also bracing for the European Central Bank’s rates decision and key US inflation data. Political uncertainties remain in the foreground, with Korea risking prolonged political impasse and Assad’s downfall leaving a power vacuum in the Middle East.

Korean markets extended their declines as opposition lawmakers said they would push for another impeachment vote on President Yoon Suk Yeol after he survived the first one. Yoon was banned from leaving the nation, Yonhap News reported. The won fell about 1% against the dollar.

In China, data showed that the country’s consumer inflation eased last month, showing that government efforts haven’t been enough to boost demand. Chinese corporate bond yields are on their longest declining streak ever, reflecting wagers on more easing. 

“I think there’s still a lot of expectations of more being done next year,” Joey Chew, head of Asia FX Research at HSBC Holdings Plc, told Bloomberg TV. “The Economic Work Conference this week may not be able to provide the concrete numbers, but I think so long as the rhetoric suggests that more is likely to come,” investors will look forward to it, Chew added.

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READ: Assad’s Fall in Syria Puts World on Watch for More Mideast Chaos

In the US, consumer price data on Wednesday will offer Federal Reserve policymakers a final look at the inflation environment ahead of their final meeting this year. 

Key events this week: 

• Mexico CPI, Monday
• Australia rate decision, Tuesday
• Germany CPI, Tuesday
• Brazil CPI, Tuesday
• Japan PPI, Wednesday
• Chinese leaders expected to hold annual Central Economic Work Conference, beginning Wednesday through Dec. 12
• RBA Deputy Governor Andrew Hauser speaks, Wednesday
• US CPI, Wednesday
• Canada rate decision, Wednesday
• Brazil rate decision, Wednesday
• Australia unemployment, Thursday
• India CPI, Thursday
• Eurozone ECB rate decision, Thursday
• Switzerland rate decision, Thursday
• France CPI, Friday
• Eurozone industrial production, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.1% as of 9:22 a.m. London time
• S&P 500 futures were little changed
• Nasdaq 100 futures were little changed
• Futures on the Dow Jones Industrial Average were unchanged
• The MSCI Asia Pacific Index rose 0.4%
• The MSCI Emerging Markets Index rose 0.5%

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Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0570
• The Japanese yen fell 0.3% to 150.44 per dollar
• The offshore yuan rose 0.1% to 7.2759 per dollar
• The British pound rose 0.2% to $1.2773

Cryptocurrencies

• Bitcoin fell 1.3% to $98,754.34
• Ether fell 3.1% to $3,871.55

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.16%
• Germany’s 10-year yield was little changed at 2.11%
• Britain’s 10-year yield declined one basis point to 4.27%

Commodities

• Brent crude rose 1.2% to $71.97 a barrel
• Spot gold rose 0.8% to $2,653.19 an ounce

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Michael Msika, Catherine Bosley and Henry Ren.

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