Japanese government bonds tumbled and stocks fell as interest rate hike bets gathered pace. Equities across the rest of Asia were mixed.
Japan’s 10-year sovereign yield briefly rose more than 10 basis points after Governor Kazuo Ueda said Tuesday that the certainty of achieving the Bank of Japan’s price projections has continued to rise. Traders judged the comments as hawkish, spurring a 1% decline in the Nikkei 225 index. The yen strengthened against the dollar.
ADVERTISEMENT
CONTINUE READING BELOW
“We’ve seen some strength in the Japanese yen across the board, and that is pulling the mighty Nikkei further down from its highs,” said Matt Simpson, a senior market strategist at City Index. “Given the magnitude of the rally into its multi-year highs, a retracement seems like a deserved rest for bulls as opposed to a bearish reversal to be concerned with.”
Muted sentiment in the region comes after the S&P 500 and Nasdaq 100 closed at all-time highs for a second straight day. While Asia is expected to gain from the Federal Reserve’s anticipated easing, some corners of Wall Street are starting to question their forecasts as swaps traders in the US rein in bets of a March rate cut.
Equity benchmarks in Hong Kong trimmed earlier gains and shares on mainland slipped after both markets jumped Tuesday on hopes for a market rescue package. Investors were skeptical of the rally sustaining as economic woes are bound to overshadow short-term market relief.
Alibaba Group Holding outperformed, with the stock also supported by a report on founder Jack Ma’s stock purchase.
The benchmark 10-year Treasury yield slipped in Asian trading after edging higher Tuesday. A gauge of the dollar was little changed after two days of gains.
In Japan, swap markets are pricing in a 58% chance of a 25-basis-point rate increase by the BOJ in April, compared with 44% at the end of last week.
New highs
US equities gained Tuesday ahead of an onslaught of company reports that promise insight into the state of the global economy.
ADVERTISEMENT
CONTINUE READING BELOW
Former President Donald Trump won the New Hampshire primary, dealing a blow to his only remaining major rival Nikki Haley and solidifying his status as the Republican party’s likely nominee.
Bitcoin rebounded after slumping for a second day. Oil steadied as signs of lower US inventories and tensions in the Middle East were balanced by expectations for increased supplies.
Key events this week:
- Canada rate decision, Wednesday
- Eurozone S&P Global Services & Manufacturing PMI, Wednesday
- US S&P Global Services & Manufacturing PMI, Wednesday
- Eurozone ECB rate decision, Thursday
- Germany IFO business climate, Thursday
- US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday
- Japan Tokyo CPI, Friday
- US personal income & spending, Friday
- Bank of Japan issues minutes of policy meeting, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.2% as of 2 p.m. Tokyo time
- Japan’s Topix fell 0.7%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng rose 0.7%
- The Shanghai Composite fell 0.2%
- Euro Stoxx 50 futures rose 0.6%
- Nasdaq 100 futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0864
- The Japanese yen rose 0.3% to 147.89 per dollar
- The offshore yuan fell 0.1% to 7.1757 per dollar
- The Australian dollar was little changed at $0.6574
Cryptocurrencies
- Bitcoin rose 1.1% to $39 640.91
- Ether rose 0.5% to $2 213.68
Bonds
- The yield on 10-year Treasuries declined one basis point to 4.12%
- Japan’s 10-year yield advanced eight basis points to 0.715%
- Australia’s 10-year yield advanced four basis points to 4.23%
Commodities
- West Texas Intermediate crude fell 0.1% to $74.27 a barrel
- Spot gold fell 0.3% to $2 024.20 an ounce
This story was produced with the assistance of Bloomberg Automation.
© 2024 Bloomberg
