Chinese equities in Hong Kong experienced a third consecutive day of decline amid public holidays in several regional markets, including the mainland. The Hang Seng China Enterprises Index dropped 1%, recovering from earlier losses of up to 2.5%, while the Hang Seng Index declined nearly 1%. The market has seen volatility as China attempts to address its equity market slump, with optimism on state support contributing to gains earlier in the week.
S&P 500 futures exhibited minimal fluctuations in the current market landscape, while Hang Seng futures experienced a 1.1% decline. Conversely, Nikkei 225 futures saw a 0.3% increase, and Japan’s Topix remained relatively stable. Australia’s S&P/ASX 200 showed a marginal rise of 0.1%.
The absence of further positive policy signals from the mainland and a lack of stock connect inflows have contributed to the decline in Hong Kong stocks. According to Steven Leung, Executive Director at UOB Kay Hian Hong Kong Ltd., there is limited buying interest in Hong Kong, aside from recent southbound stock connect activities.
In the U.S., futures remained stable after the S&P 500 closed just below 5,000, setting a new record. The Nasdaq 100 also saw a 0.2% increase. UBS Global Wealth Management Analysts expressed a base case for a soft landing for the U.S. economy, with the potential for the S&P 500 to rise to around 5,300 this year.
Concerns persisted over China’s attempts to stabilize its $7 trillion stock market, with investors pointing to the need for coordinated fiscal easing targeting demand to address fundamental economic issues. Despite stabilization efforts, challenges in the Chinese economy continue to raise uncertainty.
Australian equities showed minimal change, and Japanese stocks rose, with the weaker yen providing support. The Bank of Japan’s indication of maintaining easy policy settings contributed to the stability of the Japanese currency.
In the bond markets, Asian trading saw little change in Treasuries after a decline on Thursday. Despite healthy demand for U.S. government bonds, the 10-year yield rose 3 basis points on Thursday, reflecting adjustments in interest rate forecasts based on strong economic data. Australia’s 10-year yield edged up by 1 basis point to 4.12%.
Euro Stoxx 50 futures, however, dipped by 0.1%. Currency-wise, the Dollar Spot Index showed little change, with the euro at $1.0771, the Japanese yen at 149.39 per dollar, and the offshore yuan at 7.2118 per dollar. West Texas Intermediate crude slipped by 0.1% to $76.14 per barrel in the commodities sector, while spot gold experienced minimal fluctuations.
