Stocks in Asia advanced as investors focused on China’s policy meeting after official announcements of an ambitious 5% growth target. Traders also awaited testimony from Federal Reserve Chair Jerome Powell.
Equities in Hong Kong rebounded Wednesday, driven by Chinese tech giants Alibaba Group Holding and Tencent Holdings, while JD.com. surged ahead of its fourth-quarter results. Mainland China stocks erased earlier losses.
ADVERTISEMENT
CONTINUE READING BELOW
In China, “the short-term dynamic will be driven primarily by the tug of war between continued position squaring among foreign investors and the national team’s efforts to counter that,” said Homin Lee, senior macro strategist at Lombard Odier. As for the National People’s Congress, “there is a bit of disappointment among investors on the outline of fiscal and credit measures put forward.”
A press conference with senior officials on Wednesday may provide more details around the government’s effort to boost consumption. Central bank Governor Pan Gongsheng will brief journalists, alongside Commerce and Finance ministry chiefs and the new top securities regulator.
Elsewhere, Japan’s biggest bank expects the central bank to exit negative interest rate in two weeks and is positioning itself accordingly. Mitsubishi UFJ Financial Group Inc.’s view is much more definitive than the swap market, which rates the chances of Bank of Japan Governor Kazuo Ueda changing policy this month at about 50%.
“An end to low rates in Japan is in sight and while that is a consensus view, it still marks a pivot for the BOJ and could result in yen strength,” HSBC Holdings Plc strategists including Herald van der Linde wrote in a note. “That could be bad news for the market — it will hurt the earnings of exporters — and could impact equity flows in the region as mostly Asian funds have pouring money into Japan in the past few months.”
In corporate news, JM Financial Ltd. plunged in Mumbai after India’s central bank barred its unit from extending loans against shares and bonds, including financing subscriptions to initial public offerings.
US benchmark indexes lost traction on Tuesday after a rally that has spurred concern about sky-high valuations, with caution prevailing before Powell heads to Capitol Hill for his semiannual testimony before Congress. Powell is expected to reiterate the lack of urgency to cut rates at his testimony. Wall Street also weighed data showing the US service sector cooled — even as orders and business activity picked up.
The S&P 500 dropped 1%, while the Nasdaq 100 slipped almost twice as much. Tesla Inc. extended a two-day selloff to 11%, while Apple Inc. suffered its fifth straight loss. Contracts for US equities rose in Asian trading.
Treasury 10-year yields steadied Wednesday after falling six basis points to 4.15% in the previous session with Australian and New Zealand yields tracking those moves. A gauge of dollar was little changed.
ADVERTISEMENT
CONTINUE READING BELOW
Meanwhile, Bitcoin steadied. It hit a record Tuesday for the first time in more than two years, before rapidly retreating as traders took some profits. Gold was little changed after also surging to a record high in the previous session, as expectations for US rate cuts and geopolitical tensions pushed it higher. Such moves are threatening to send mixed messages about the appetite for risk across global markets.
In commodities, oil steadied after a decline as a report showed US inventories are continuing to expand, a sign supply may be running ahead of demand.
Key Events This Week:
- Canada rate decision, Wednesday
- Eurozone retail sales, Wednesday
- US ADP employment, JOLTS job openings, Wednesday
- Fed Chair Jerome Powell testifies before the House Financial Services Committee, Wednesday
- Fed issues Beige Book, Wednesday
- Fed’s Neel Kashkari (Minneapolis) and Mary Daly (San Francisco) speak, Wednesday
- China trade, forex reserves, Thursday
- European Central Bank’s rate decision, Thursday
- US initial jobless claims, trade, Thursday
- President Joe Biden delivers the State of the Union address, Thursday
- Fed Chair Jerome Powell testifies before the Senate Banking Committee, Thursday
- Cleveland Fed President Loretta Mester speaks, Thursday
- Eurozone GDP, Friday
- US nonfarm payrolls, unemployment, Friday
- New York Fed President John Williams speaks, Friday
- ECB Governing Council member Robert Holzmann speaks, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 2:16 p.m. Tokyo time
- Japan’s Topix rose 0.5%
- Australia’s S&P/ASX 200 rose 0.1%
- Hong Kong’s Hang Seng rose 1.8%
- The Shanghai Composite rose 0.1%
- Euro Stoxx 50 futures were little changed
- Nasdaq 100 futures rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0853
- The Japanese yen was little changed at 149.93 per dollar
- The offshore yuan was little changed at 7.2119 per dollar
- The Australian dollar rose 0.2% to $0.6517
Cryptocurrencies
- Bitcoin rose 3.1% to $65,301.39
- Ether rose 5.4% to $3,713.78
Bonds
- The yield on 10-year Treasuries was little changed at 4.15%
- Japan’s 10-year yield advanced 1.5 basis points to 0.710%
- Australia’s 10-year yield declined eight basis points to 4.01%
Commodities
- West Texas Intermediate crude rose 0.3% to $78.36 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
© 2024 Bloomberg
