Asian shares were flat on Thursday, with markets holding onto their weekly gains as expectations grow that global interest rates would fall next year, but oil prices dipped on the likelihood of smaller-than-expected output cutbacks by OPEC+. Investors are also looking to Chinese policymakers for hints on possible help for the long-suffering property market, which is in line with the larger economic plans they are working out.
With Japan and the United States on holiday, MSCI's broadest index of Asia-Pacific equities outside Japan fell 0.11 percent in light trading. The US market, which has priced in another rate hike in December, shrugged off strong weekly job data Wednesday night, which may reduce the chances of the Federal Reserve cutting rates sooner than expected, according to Redmond Wong, Greater China market strategist at Saxo Markets.
On Thursday, Japanese markets will be closed for a national holiday, despite the Nikkei 225 index rising 0.3% the day before and approaching a three-decade high. Due to the Thanksgiving holiday in the United States, trading was expected to be quiet globally.
On Thursday, China's benchmark stock index declined 0.3%, while the real estate sub-index sank 0.8%. A prominent asset manager with significant exposure to the real estate market reported that it is facing insolvency with up to $64 billion in applicable liabilities.
According to Reuters, Chinese government experts will recommend to an annual policymakers' conference that economic growth targets for next year be set at 4.5 percent to 5.5 percent. The Hang Seng index in Hong Kong declined 0.7%, while Australian equities fell 0.4%.
Markets have been relatively upbeat this month, with stocks rising on prospects of a more benign interest rate environment. The S&P 500, Wall Street's benchmark index, is approaching a new high for 2023, with the S&P 500 and MSCI's all-country index both up more than 8% this month alone. The Nasdaq Composite, which is heavily weighted towards technology, is up 11% for the month.
The next round of forward-looking flash November PMIs will assist markets in assessing recession risks and the timing of rate cuts. The eurozone and UK PMIs are already below 50, indicating that economic activity is shrinking, while the US Oct manufacturing PMI fell substantially.
On Thursday, the yield on the benchmark 10-year note was 4.408 percent, down from 4.363 percent two months earlier. The yield on benchmark 10-year notes was 4.408 percent on Thursday, down from 4.363 percent two months ago.
The dollar index gained overnight, rebounding from a two-and-a-half month low as statistics indicated that the number of Americans submitting new unemployment claims declined more than expected last week.
US crude sank 1.25 percent to $76.14 per barrel, while Brent fell 1.37 percent to $80.84 per barrel, continuing losses from the previous day after OPEC+ postponed a ministerial meeting, raising concerns that producers would cut output less than expected.
Sterling sank for a third straight session on Wednesday as UK Finance Minister Jeremy Hunt outlined tax cuts and other measures to encourage development in his autumn budget, but anticipated a significantly more lackluster economic outlook than previously expected.