Tencent stock drops 7% after China issues draft rules aiming to curb gamers’ spending
Meanwhile, the dollar wobbled ahead of US inflation data
22 December 2023 - 08:14
byTom Westbrook
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Singapore — Chinese internet stocks slumped on regulatory news on Friday as Beijing continues to tighten regulations for the sector, dragging Asian stocks down for the final full trading week of the year.
The dollar wobbled ahead of US inflation data, which is expected to validate bets on rate cuts in 2024.
MSCI’s broadest index of Asia-Pacific shares outside Japan gave up gains to trade flat after China issued draft rules that would impose spending limits on gamers.
NetEase lost 12% and Tencent fell 7%, pulling the Hang Seng 0.4% lower. Banking shares helped Japan’s Nikkei rise 0.2%. The euro poked above $1.10.
Outside Asia, markets have been in a festive mood for weeks as inflation data around the world has showed a slowdown and the Federal Reserve signalled it has finished raising interest rates.
Two-year US treasury yields are down almost 38 basis points (bps) in a week-and-a-half and fell 2bps overnight when third-quarter US core PCE inflation was revised down to 2%.
The data has markets girding for a downside surprise on the last key number before Christmas: November’s personal consumption expenditure index, with consensus expectations for a monthly increase of 0.2%. The numbers are due at 1.30pm GMT.
“Analysts are confident it shouldn’t be higher than 0.2%,” said National Australia Bank’s head of currency strategy, Ray Attrill, in Sydney. “Could we get 0.1%? It’d probably take 0.1% to see an extension of the moves we have seen.”
Overnight, US stocks bounced back from a sudden slide at the end of Wednesday’s session and the S&P 500 rose 1%. The index is within 2% of its record high.
S&P 500 futures dipped 0.1% in Asia, and Nike shares slid almost 12% in after-hours trade after the company cut its sales forecast, blaming cautious consumers. European futures were flat.
Oil is set for a weekly gain on nervousness about the security of Red Sea shipping, but prices fell overnight after Angola said it would quit Opec, raising questions about the producer group’s efforts to limit global supply.
Brent crude futures were up 58c to $79.97 a barrel in Asian trade on Friday, for a weekly gain of 4.5%.
In currency trade the dollar has come under pressure from market expectations of more than 150bps of rate cuts in 2024.
At $1.1002 the euro is up 1% this week, even though a similar rate of cuts in priced in for Europe next year. The common currency is also up about 1% against sterling, which fell sharply this week after a surprise dive in inflation.
Sterling was set for its biggest weekly drop on the euro and against the Aussie dollar for three months. It last bought $1.2686 and traded at 86.71p/€.
The dollar index is down 0.7% this week to ¥101.85. For the year it is down 2.4%. Among Group of 10 currencies, the best performer of the year is the Swiss franc, up nearly 8% on the dollar, while the yen’s 7.8% drop made it the worst.
Attrill noted the mirror moves of the two so-called safe haven currencies underscores the overwhelming influence of the Bank of Japan’s monetary policy. It has stuck with negative interest rates while the rest of the world has hiked.
Policymakers debated communication around an eventual exit from such settings in December, meeting minutes showed on Friday. But data showing a slowdown in the pace of Japan’s core inflation takes off some of the pressure to hurry.
The dollar rose marginally to ¥142.43 on Friday.
Gold is set to end the week and the year ahead, with a 12% gain so far this year to $2,049/oz.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Tencent stock drops 7% after China issues draft rules aiming to curb gamers’ spending
Meanwhile, the dollar wobbled ahead of US inflation data
Singapore — Chinese internet stocks slumped on regulatory news on Friday as Beijing continues to tighten regulations for the sector, dragging Asian stocks down for the final full trading week of the year.
The dollar wobbled ahead of US inflation data, which is expected to validate bets on rate cuts in 2024.
MSCI’s broadest index of Asia-Pacific shares outside Japan gave up gains to trade flat after China issued draft rules that would impose spending limits on gamers.
NetEase lost 12% and Tencent fell 7%, pulling the Hang Seng 0.4% lower. Banking shares helped Japan’s Nikkei rise 0.2%. The euro poked above $1.10.
Outside Asia, markets have been in a festive mood for weeks as inflation data around the world has showed a slowdown and the Federal Reserve signalled it has finished raising interest rates.
Two-year US treasury yields are down almost 38 basis points (bps) in a week-and-a-half and fell 2bps overnight when third-quarter US core PCE inflation was revised down to 2%.
The data has markets girding for a downside surprise on the last key number before Christmas: November’s personal consumption expenditure index, with consensus expectations for a monthly increase of 0.2%. The numbers are due at 1.30pm GMT.
“Analysts are confident it shouldn’t be higher than 0.2%,” said National Australia Bank’s head of currency strategy, Ray Attrill, in Sydney. “Could we get 0.1%? It’d probably take 0.1% to see an extension of the moves we have seen.”
Overnight, US stocks bounced back from a sudden slide at the end of Wednesday’s session and the S&P 500 rose 1%. The index is within 2% of its record high.
S&P 500 futures dipped 0.1% in Asia, and Nike shares slid almost 12% in after-hours trade after the company cut its sales forecast, blaming cautious consumers. European futures were flat.
Oil is set for a weekly gain on nervousness about the security of Red Sea shipping, but prices fell overnight after Angola said it would quit Opec, raising questions about the producer group’s efforts to limit global supply.
Brent crude futures were up 58c to $79.97 a barrel in Asian trade on Friday, for a weekly gain of 4.5%.
In currency trade the dollar has come under pressure from market expectations of more than 150bps of rate cuts in 2024.
At $1.1002 the euro is up 1% this week, even though a similar rate of cuts in priced in for Europe next year. The common currency is also up about 1% against sterling, which fell sharply this week after a surprise dive in inflation.
Sterling was set for its biggest weekly drop on the euro and against the Aussie dollar for three months. It last bought $1.2686 and traded at 86.71p/€.
The dollar index is down 0.7% this week to ¥101.85. For the year it is down 2.4%. Among Group of 10 currencies, the best performer of the year is the Swiss franc, up nearly 8% on the dollar, while the yen’s 7.8% drop made it the worst.
Attrill noted the mirror moves of the two so-called safe haven currencies underscores the overwhelming influence of the Bank of Japan’s monetary policy. It has stuck with negative interest rates while the rest of the world has hiked.
Policymakers debated communication around an eventual exit from such settings in December, meeting minutes showed on Friday. But data showing a slowdown in the pace of Japan’s core inflation takes off some of the pressure to hurry.
The dollar rose marginally to ¥142.43 on Friday.
Gold is set to end the week and the year ahead, with a 12% gain so far this year to $2,049/oz.
Bitcoin is up 160% this year to $44,114.
Reuters
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