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TEHRAN, Sept 10 -Most Asian stocks swung lower on Tuesday, weighed by Chinese markets after mainland factory-gate prices shrank at their fastest pace in three years while reports of German stimulus plans pushed global bond prices down.
TEHRAN, Young Journalists Club (YJC) -China’s producer price index fell 0.8% in August year-on-year, official data showed on Tuesday, its sharpest decline since August 2016 as flagging demand at home and abroad forced some businesses to slash prices.
The data pushed blue chip shares in China .CSI300 down 0.41%, which in turn drove an index of Asian stocks outside of Japan .MIAPJ0000PUS 0.23% lower, having traded flat earlier in the session.
That set the tone for early European trade with the pan-region Euro Stoxx 50 futures STXEc1 down 0.09%, German DAX futures FDXc1 off 0.12%, and FTSE futures FFIc1 0.09% lower.
“Globally inflationary pressure remains subdued, so in that sense China is not an outlier,” said Sean Darby, global equity strategist at Jefferies in Hong Kong.
“People are positioned very bearish, but I don’t think the market wants to be too bearish. Bond yields are reversing. Markets are a little more unsure about their expectations for central banks, because a lot of easing is already priced in.”
U.S. stock futures ESc1 were down 0.13% in Asia after the S&P 500 .SPX ended flat in New York on Monday. Australian shares were down 0.71%. Bucking the trend, Japan's Nikkei stock index .N225 rose 0.24%.
Investor focus shifts to the European Central Bank, which is widely expected to introduce a package of monetary easing and stimulus measures on Thursday to offset the effects of an ongoing U.S.-Sino trade war and a global economic slowdown.
The U.S. Federal Reserve is also widely expected to cut interest rates next week as policymakers race to shield the global economy from risks, which also include Britain’s planned exit from the European Union.
“Bond yields had fallen so far so fast that they were due for a pullback, and you have some nerves setting in before the ECB,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors in Sydney.
“The move in bond yields will affect share prices, but its still uncertain how stocks will react. Over the next six months sentiment around global growth will improve, but some of the risks remain to be resolved.”
Germany’s 10-year Bund yield rose to a one-month high at minus 0.565% DE10YT=RR, while longer-dated 30-year bond yields DE30YT=RR closed at minus 0.036% on Monday.
Germany is considering setting up independent public agencies that could take on new debt and invest in the economy, three people familiar with talks about the plan told Reuters.
Europe’s largest economy is teetering on the brink of recession, but strict national spending rules have tied policymakers hands on fiscal policy.
Source:reuters
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