Asian Investors Wary as China Briefing Underwhelms: Markets Wrap

(Bloomberg) -- Asian markets are poised for a cautious start as China’s Finance Ministry briefing at the weekend underwhelmed and a drop in factory prices added to concerns over the nation’s economy.

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Australian and New Zealand dollars slipped against the greenback in early trading on Monday. US stock futures fell in Asia after the S&P 500 rose 0.6% on Friday. Japanese markets are closed for a holiday, while Hong Kong trading resumes following a three-day weekend. Elsewhere, oil declined over 1%, while gold edged lower.

Investors will be monitoring Chinese markets after Finance Minister Lan Fo’an vowed more support for the struggling property sector and hinted at greater government borrowing, without producing a headline monetary figure that the markets had sought. Separately, data Sunday showed China’s consumer prices were still weak and that factory-gate prices fell for a 24th straight month, underscoring the need for more policy support.

“Markets are likely disappointed that China’s Finance Ministry did not unveil concrete additional stimulus,” Richard Franulovich, head of FX strategy at Westpac Banking Corp., wrote in a note to clients. “Though, a more conclusive market reading will come when China’s local markets open later Monday.”

Patience has been wearing thin among investors, who have been waiting for more fiscal measures to help sustain the rally sparked by the stimulus blitz that authorities unleashed in late September. The CSI 300 Index, a benchmark of onshore equities, capped its biggest weekly loss since late July on Friday, while the Aussie and Kiwi - proxies for China sentiment among developed market currencies - fell a second week for the first time in a month.

“With market participants looking to efficiently price certainty on China’s growth prospects, the lack of immediate clarity on China’s efforts to reflate the economy is unlikely to be taken well,” said Chris Weston, head of research at Pepperstone Group. “However, there was a message of strong intent and a defiant stance to hit its 5% GDP target, with a clear appetite for a sizable increase in the fiscal deficit and a potential move away from its 3% deficit limit – a factor that may limit any initial fallout in equity.”