Asian stocks fall as China’s stimulus package disappoints markets

HONG KONG – Asian stocks fell on Monday after a record day for U.S. stocks as China’s stimulus package disappointed investors’ expectations.

China approved a 6 trillion yuan ($839 billion) plan on Friday during a session of its national parliament. The long-awaited stimulus package aims to help local governments refinance their mountains of debt to boost growth in the world’s second-largest economy.

“It’s not exactly the growth rocket that many were hoping for. Although a significant number, the stimulus package is less about boosting economic growth and more about plugging gaps in a struggling local government system,” SPI Asset Management’s Stephen Innes said in a commentary.

Meanwhile, China’s inflation rate rose 0.3% year-on-year in October, the National Bureau of Statistics said on Saturday. This represents a slowdown from September’s 0.4% rise and fell to its lowest level in four months.

The Hang Seng fell 1.4% to 20,439.99 and the Shanghai Composite gained slightly, now up 0.2% to 3,461.41.

Japan’s benchmark Nikkei 225 rose less than 0.1% to 39,533.32. Australia’s S&P/ASX 200 fell 0.4% to 8,266.20. South Korea’s Kospi fell 1.1% to 2,532.62.

U.S. futures were higher while oil prices fell.

On Friday, the S&P 500 rose 0.4% to 5,995.54, its biggest weekly gain since early November 2023, and briefly exceeded 6,000 for the first time. The Dow Jones Industrial Average climbed 0.6% to 43,988.99, while the Nasdaq Composite gained 0.1% to 19,286.78.

In the bond market, yields on longer-term government bonds fell.

The yield on the 10-year Treasury note fell to 4.30% on Friday from 4.33% late Thursday. But it is still well above mid-September levels, when it was close to 3.60%.

Treasury yields rose in large part because the U.S. economy has remained much more resilient than feared. The hope is that it can remain solid as the Federal Reserve continues to cut interest rates to keep the job market buoyant, now that it has helped bring inflation down close to its 2% target.

Part of the increase in yields can also be attributed to President-elect Donald Trump. He’s talking about tariffs and other measures that economists say could drive up inflation and U.S. government debt in addition to economic growth.

Traders have already started reducing their forecasts for how many interest rate cuts the Fed will make next year for this reason. While lower interest rates can stimulate the economy, they can also increase inflation.

In other business on Monday, U.S. benchmark crude oil lost 4 cents to $70.34 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, lost 7 cents to $73.94 a barrel.

The dollar rose to 153.47 Japanese yen from 152.62 yen. The euro fell from $1.0723 to $1.0720.

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AP writer Stan Choe contributed to this report.