Asian stocks muted with rate cuts in focus; Hong Kong dips on weak China data

Investing.com– Asian stocks moved little in holiday-thinned trade on Monday, with focus turning squarely to a Federal Reserve meeting this week where the central bank is widely expected to cut interest rates. 

Hong Kong fell following a barrage of weak economic data from the mainland, released over the weekend. 

But regional trading volumes were limited on account of market holidays in China, Japan, and South Korea. 

Asian markets took some positive cues from a strong performance on Wall Street last week, where growing optimism over lower interest rates sparked strong gains. The S&P 500 and Dow Jones Industrial Average came close to record highs on Friday.

U.S. stock index futures were muted in Asian trade, showing little reaction to reports of a second assassination attempt on Republican presidential candidate Donald Trump. 

Hong Kong stocks slip on weak Chinese data 

Hong Kong’s Hang Seng index fell 0.6%, weighed by losses in mainland stocks following a string of weak Chinese economic readings.

Data released over the weekend showed Chinese industrial production and retail sales fell less than expected in August. 

Unemployment rose, while house prices declined for another straight month. 

The readings ramped up concerns over a protracted slowdown in Asia’s biggest economy, further denting sentiment towards the country and regional markets.

While mainland Chinese markets were closed for the day, they are likely to fall sharply when they reopen on Thursday. 

Asian stocks muted amid rate cut speculation 

Broader Asian markets kept to a tight range amid speculation over U.S. interest rates. 

Australia’s ASX 200 rose 0.5%, while futures for India’s Nifty 50 index pointed to a flat open. 

The Federal Reserve is widely expected to cut interest rates at the conclusion of a meeting on Wednesday.

But traders are spilt over just by how much the Fed will cut rates.

Traders are pricing in a 50% chance for a 50 basis point cut, and a 50% chance for a 25 bps cut, CME Fedwatch showed.

Still, the Fed is likely to kick off an easing cycle from Wednesday, with lower rates presenting a more accommodative environment for stocks.