Chinese shares led losses in Asian equities on Monday as concerns over the weak property sector and uncertain growth outlook weighed on investor sentiment. Most other regional benchmarks also fell as investors positioned themselves ahead of this week’s US inflation data and Federal Reserve policy decision.
Shares connected to Chinese electric vehicle makers slumped as traders awaited the European Commission’s decision on provisional duties expected this week. Additionally, tourism-related shares dropped amid weak holiday travel demand during the recent Dragon Boat Festival holiday. The property sector failed to rally even after the State Council signaled stronger support for the sector on Friday.
Market strategist Jun Rong Yeap from IG Asia Pte noted, “The Hang Seng Index remains weak, with market participants wanting to see more evidence of a recovery trend ahead, but incoming data has been more mixed than assuring.” He added, “Eyes will be on China’s inflation data this week, where positive consumer price growth may be on watch to reflect some stabilization in domestic demand.”
Treasuries crept higher in Asia, while the dollar remained relatively unchanged. Australia’s 10-year bond yield jumped, catching up with Friday’s move in Treasuries as traders adjusted their timeline for potential Fed interest-rate cuts.
In corporate news, developer Dexin China Holdings received a liquidation order from a Hong Kong court, adding to a growing number of legal victories for creditors involving overdue debt.
Looking ahead, investors are preparing for the US consumer price data and the Fed rate decision scheduled for Wednesday. The Fed is expected to keep borrowing costs on hold, but there is uncertainty surrounding officials’ rate projections. Economists are divided on whether policymakers will signal two cuts in their “dot plot” or show just one or no cuts at all.
Overall, the market remains cautious as investors await key economic data and central bank decisions that could impact market direction in the coming days.
