(Bloomberg) — Equities in China and Hong Kong were standout gainers on Monday after Beijing’s latest measures to tackle its property crisis. Stocks elsewhere in Asia declined with Japan’s benchmark plummeting.
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The benchmark CSI 300 index was headed for a technical bull market, and both iron ore and Chinese developer stocks surged after three major cities eased rules on housing purchases. A slump in Japanese stocks contributed to a decline in the MSCI Asia Pacific gauge, after the victory of Shigeru Ishiba in the Japanese ruling party’s leadership race wrong footed investors.
Ishiba’s new administration will pursue continuity in economic, monetary and foreign policy, with the role of finance minister going to Katsunobu Kato, a former government spokesman, according to local media. The yen pared the previous session’s gains to weaken 0.2% on Monday.
The markets are digesting “the combined impact of China’s stimulus, softer US inflation, rising geopolitical tensions, together with the surprise Japan LDP election results,” Michael Wan, an analyst at Mitsubishi UFJ Financial Group, Inc. wrote. “Our base case is for Ishiba to reflect the status quo of supporting Bank of Japan normalization and hence provide support for the yen.”
Investors are heading into the final quarter as global economic outlook improves following China’s stimulus measures and as central banks from Indonesia to Europe and the US begin cutting interest rates to support growth.
The Federal Reserve’s preferred measure of underlying US inflation and household spending rose modestly in August, underscoring a cooling economy. Treasury yields and the dollar were little changed on Monday, with investors anticipating the Fed will stay on track for more rate cuts in the coming months.
US stocks are set to outperform Treasuries for the remainder of the year, while emerging markets are preferred to developed ones, according to the latest Bloomberg Markets Live Pulse survey.
Tensions in the Middle East were at risk of escalating once again, however, after Israel’s killing of Hezbollah’s leader, Hassan Nasrallah, in Beirut.
Oil was steady on Monday, with the market waiting to see how Iran will respond.
This week, traders will be paying close attention to Eurozone inflation and manufacturing activity data are due before the US jobs report on Friday that will help assess the outlook for Federal Reserve rate cuts into year-end.
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 11:58 a.m. Tokyo time
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Nikkei 225 futures (OSE) fell 4.9%
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Japan’s Topix fell 3.3%
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Australia’s S&P/ASX 200 rose 0.7%
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Hong Kong’s Hang Seng rose 1.7%
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The Shanghai Composite rose 5.3%
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Euro Stoxx 50 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro was little changed at $1.1161
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The Japanese yen fell 0.2% to 142.52 per dollar
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The offshore yuan fell 0.2% to 6.9944 per dollar
Cryptocurrencies
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Bitcoin fell 2.2% to $64,416.04
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Ether fell 1.7% to $2,616.05
Bonds
Commodities
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West Texas Intermediate crude rose 0.6% to $68.62 a barrel
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Spot gold fell 0.2% to $2,652.55 an ounce
This story was produced with the assistance of Bloomberg Automation.
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