Asia report: Most markets fall ahead of key central bank meetings

Asia-Pacific markets closed mostly lower on Monday, reversing early gains as traders weighed key economic data from China and anticipated decisions from major central banks this week.

The Bank of Japan and the People’s Bank of China are set to meet, while the US Federal Reserve is widely expected to cut interest rates.

“China has started the week with underwhelming data, as November retail sales grew by just 3.0% year-on-year, missing the expected 4.6% growth,” said TickMill’s Patrick Munnelly.

“House prices continued their decline, while industrial output remained stable.

“Officials have been considering stimulus options, such as lowering bank reserve requirements; however, credit data suggests lower borrowing costs aren't effective amid a lack of investment interest.”

Munnelly noted that as a result, Chinese bond yields hit another record low, prompting the central bank to consult with commercial banks on their positions.

“The yuan is also facing pressure, as 10-year yields underwent their largest weekly drop since 2018, coinciding with a notable rise in longer-dated Treasury yields this year.

“There are discussions about Beijing potentially letting the yuan depreciate to bolster the economy, but this has drawn criticism from president-elect Donald Trump's trade advisor, Peter Navarro.

“In South Korea, political stability has improved with Han Duck-soo temporarily replacing the impeached president Yoon Suk Yeol.”

Most markets start the week in negative territory

In Japan, the Nikkei 225 dipped 0.03% to 39,457.49, while the Topix fell 0.3% to 2,738.33.

Losses on Tokyo’s benchmark were led by Yamato Holdings and Odakyu Electric Railway, down 4.25% and 4.21%, respectively.

Sumitomo Metal Mining also slid 3%.

Chinese markets saw broader declines, with the Shanghai Composite losing 0.16% to 3,386.33 and the Shenzhen Component dropping 1.3% to 10,573.92.

Zhejiang Red Dragonfly Footwear and Shanghai Huitong Energy each tumbled by the daily 10% limit, reflecting continued market volatility.

Hong Kong’s Hang Seng Index retreated 0.88% to 19,795.49, dragged down by Longfor Properties, which slid 4.87%.

BYD Electronic International and China Mengniu Dairy also recorded losses of more than 3%.

In South Korea, the Kospi 100 dropped 0.31% to 2,484.27, with KakaoPay Corporation plummeting 8.52%, marking one of the day’s steepest declines in the region.

Australia’s S&P/ASX 200 slipped 0.56% to 8,249.50, weighed down by HMC Capital’s 13.67% plunge.

New Zealand bucked the trend, with the S&P/NZX 50 gaining 0.34% to 12,797.33.

Fisher & Paykel Healthcare Corporation led gains, rising 3.94%, followed by Vital Healthcare Property Trust and Sky Network Television.

In currency markets, the dollar was last 0.12% stronger on the yen, trading at JPY 153.84, as it advanced 0.18% against the Aussie to AUD 1.5747.

The greenback was weaker against the Kiwi, however, retreating 0.01% to change hands at NZD 1.7348.

Oil prices continued to weaken, with Brent crude futures last down 0.9% on ICE at $73.82 per barrel, and the NYMEX quote for West Texas Intermediate dropping 1.11% to $70.50.

Mixed signals in China data dump ahead of global central bank meetings

On the data front, China’s economy showed mixed signals as retail sales grew 3% year-on-year, falling short of the 4.6% forecast in a Reuters poll.

That marked a sharp deceleration from the 4.8% growth recorded in October, which had benefited from an early start to the Singles’ Day shopping festival.

Industrial production, however, offered a brighter note, rising 5.4% and slightly exceeding expectations of 5.3%, as per data released by the National Bureau of Statistics.

Meanwhile, real estate investment continued its downward trajectory, contracting 10.4% in the first 11 months of the year, deepening from a 10.3% decline in the January-October period.

In political developments, South Korea’s National Assembly voted to impeach president Yoon Suk-yeol, with 204 lawmakers in the 300-seat chamber supporting the motion.

The impeachment, triggered by Yoon’s controversial declaration of martial law, marked a historic move against the leader.

Looking ahead, central bank meetings loomed large for global markets.

The US Federal Reserve was expected to cut interest rates by 25 basis points on 18 December, with the CME FedWatch tool assigning a 96% probability to the move.

In Asia, the Bank of Japan was likely to maintain its current monetary policy when it announces its decision on Thursday, while the People’s Bank of China would reveal its loan prime rates on Friday.

The one-year LPR, which affects most corporate and household loans, and the five-year LPR, a key mortgage benchmark, would be closely watched for signs of support to the country’s struggling property sector.

Reporting by Josh White for Sharecast.com.