Equities Performance Across Asia

Equities in Sydney experienced gains, while stocks in Tokyo saw a decline. US stock futures edged slightly lower after the S&P 500 closed with a modest 0.1% rise, and the Nasdaq 100 slipped by 0.5%. Investors continue rotating out of tech megacaps, which had been the driving force behind the recent bull market. Meanwhile, markets in China and South Korea remained closed due to public holidays.

Currency and Treasury Movements

The US dollar remained near its lowest point since January as traders increased their bets that the Federal Reserve would implement a half-point rate cut during their Wednesday meeting. Treasury 10-year yields were steady after a dip on Monday.

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“The debate between 25 basis points and 50 basis points persists despite the bulk of the pre-meeting data already in hand,” said Ian Lyngen, strategist at BMO Capital Markets. “Regardless of whether the Fed chooses to front-load the normalization campaign, it’s clear that the trajectory of Fed policy is poised to shift from restrictive toward a neutral stance.”

In Asia, concerns are rising regarding the strength of China’s economy. Disappointing economic data released over the weekend has intensified the pressure on authorities to boost both fiscal and monetary stimulus to meet this year’s growth targets.

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“For the Hang Seng, it’s going to be very difficult to shake off the negative sentiment and the dark clouds that have returned following the bleak Chinese economic data,” said Tony Sycamore, market analyst at IG Australia Pty Ltd.

Markets in Indonesia and Malaysia reopened on Monday after being closed for holidays. Investors in Hong Kong are also closely watching the trading debut of Chinese appliance giant Midea Group Co. The strong demand for the largest public stock offering in three years has reignited optimism for Hong Kong’s struggling market.

The yen held steady on Monday after strengthening beyond the 140-per-dollar mark for the first time since July 2023. This marks a continuation of the Japanese currency’s rally from its weakest level in nearly 38 years in July. The Bank of Japan is expected to hold its policy steady this Friday after raising rates twice earlier this year.

In commodities, gold remained stable near a record high, while oil prices climbed for the second consecutive session.