(Bloomberg) — Asian stocks fell amid speculation investors are trimming some of their holdings before a rush of events in coming days including major central bank decisions, key economic data and earnings from US megacap companies.
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The MSCI Asia Pacific Index extended July’s decline to 0.5%, set for its first monthly drop since April. Shares in Hong Kong led losses Tuesday, falling more than 1%, as optimism waned over the Chinese government’s stimulus plans. Australian and Japanese stocks also slipped, and US equity futures inched lower.
The yen held near the strongest level in 12 weeks before a Bank of Japan policy decision on Wednesday. The dollar crept higher against most of its major peers as traders positioned for a Federal Reserve review the same day. Treasuries were little changed, heading for a third month of gains.
“Market participants are taking risk off the table ahead of heavy event risks this week from key central bank meetings to Big tech earnings,” said Charu Chanana, a strategist at Saxo Capital Markets in Singapore.
BOJ Governor Kazuo Ueda will have investors on high alert Wednesday when he lays out a detailed plan for quantitative tightening after years of massive easing. He may also double down by adding an interest-rate hike. The central bank is looking for evidence sustained increases in wages will spur a recovery in consumption and kindle demand-led price growth, allowing authorities to further normalize monetary policy.
China’s bonds advanced, with 10-year yields dropping to another record low. The rally in the securities is seen testing the patience of the central bank, which is walking a tightrope between boosting growth with easing measures and reining in potential financial shocks from an overheated bond market.
Investors are also on the lookout for the outcome of a Chinese Politburo meeting — possibly some time this week — for any guidance on potential stimulus measures. Still, sentiment remains bearish after efforts to help growth this year failed to reverse a property downturn and revive subdued…
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