Stocks, Futures Slip at the Start of a Data-Rich Week – Asia Market Wrap

Stocks in Asia sank behind European and US share futures as investors braced for a busy week with news on Chinese activity indices and the Federal Reserve’s favoured measure of inflation.

MSCI’s Asia Pacific index reversed earlier advances as Hong Kong and mainland China equities fell. Contracts for European and US equities also fell after the S&P 500 surge stopped at the end of last week, driven down by profit-taking in megacap tech sectors.

Concerns about China arose after Moody’s Investors Service removed credit ratings for 11 Chinese companies on Friday, in an extraordinary frenzy that highlights the repercussions from record default rates. Traders are now waiting to see if the government would provide additional stimulus after President Xi Jinping urged for a boost in traditional consumer product sales, such as cars and home appliances.

Expectations for new measures were also spurred by weak borrowing by local governments, sparking speculation that Beijing will pick up the slack and incur more debt. When China releases purchasing managers’ statistics later this week, whether or not current stimulus is beneficial to the economy will be scrutinised.