Market sentiment is negative this Monday in January. in Asiamajor indexes close the session in the red with the Hang Seng Hong Kong control losses.
The pessimistic climate is driven by several factors. Asian shares fell below parity with Chinese stocks extending their recent retreat. Meanwhile, investors are gearing up for data oninflation in the US and for a season of corporate quarterlies that enliven the week.
They are still in the background geopolitical tensionswith disruptions in the Red Sea raising shipping costs to Europe, while Israel’s conflict with Hamas threatens to spill over into Lebanon and Iran.
Worries about tightening regulation of the gaming industry and worries about the Chinese government’s lack of efforts to support the economy have pushed China lower, which remains the focus of analysts’ attention.
Markets in the red in Asia, China under pressure. What’s happening?
The Chinese indices Shanghai and Shenzhen closed the session with a loss of 1.42% and 1.42%, respectively. 1.50%. China’s blue chips (.CSI300) fell 1.1% to a five-year low after losing nearly 3% last week.
Investor sentiment on the dragon remains relatively negative, despite gains in global stocks over the last two months of 2023, Nomura Group analysts, including Singapore’s Chetan Seth, said in a note to clients.
“There are more signs of support for the economy in China, but equity investors remain unconvinced”they said.
It seems that Beijing’s troubles are not over. Shares in real estate firm China Evergrande’s electric vehicle manufacturing division fell 23% after the unit revealed its vice president had been arrested.
Zhongzhi Enterprise Group filed for bankruptcy liquidation as a conglomerate last Friday China’s shadow banking is unable to repay its debt due to the deepening real estate crisis in the country. Shadow banks in China operate by pooling household and business savings and offering loans for investments in real estate, stocks, bonds and commodities. Companies like Zhongzhi have often financed many of China’s big real estate developers.
Beyond China, focus on the Fed and oil
Outside of China, uncertainties concern the US economy and The Fed is moving. Futures are discounting around 136 basis points rate cuts next year compared to the Federal Reserve’s dot chart of 75 basis points.
The probability of a hit already eased somewhat in March to a still-high 64% and is likely to change again depending on Thursday’s US consumer price report.
As regards raw materialoil lost about 1% afterSaudi Arabia cut official selling prices for all regions, underscoring the deteriorating outlook and overcoming concerns over tensions in the Red Sea and supply disruptions in Libya.