Asia stocks mixed, treasuries echo Europe sell-off: Markets wrap

Shares in Asia were mixed while Treasuries fell after declines in European bonds, eroding a November rally in US debt. Oil extended losses.

Hong Kong and mainland Chinese equities dropped, reversing Thursday’s rally inspired by Beijing’s widening property rescue campaign. Japanese stocks rose in catch-up play after a national holiday, while those in Australia also gained. US futures contracts were steady.

Treasuries fell after trading resumed in Asia following a holiday, paring gains for the month that have pushed one measure of the market toward its best month since March. The 10-year yield rose more than five basis points and followed Thursday declines in European bonds. Investors responded to a report that Germany will suspend debt limits for a fourth consecutive year, adding to concerns over more borrowing as the euro-area economy slows.

The Bloomberg dollar index steadied after falling Thursday as the greenback gave up gains against most major currencies. Australian and New Zealand yields advanced.

In China, a gauge of developer stocks fell 1.5% in early afternoon trade, following a 8.9% jump Thursday. The previous surge came after Bloomberg News reported that China may allow banks to offer unsecured short-term loans to qualified builders for the first time, the latest effort to arrest a housing slump.

“The property developer debt issue will be solved sooner or later,” said Jian Shi Cortesi, a fund manager at GAM Investment Management. “If this measure is not enough, we will see more support next year,” she added, referring to the report on banks extending unsecured loans.

Still, global stocks are on track for the best month in three years, with the MSCI All Country World Index up 8.6% this month amid growing hopes for peaking US interest rates.

“Lower bond yields are driving equity valuations, although the fundamental reason behind the drop in yields, lower inflation caused by weaker growth, isn’t completely discounted into earnings estimates,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “Eventually, profit expectations will have to align with economic reality.”

European Central Bank Governing Council member Francois Villeroy de Galhau said the ECB won’t increase borrowing costs again, unless there is an unexpected event.

Oil continued its slide on news that OPEC+ will hold its delayed meeting online rather than in-person. The delay, and discord between members over quotas, has cast doubt on the prospect of further production cuts.

Inflation in Japan accelerated, although the October reading was slightly less than expected. Consumer prices rose 3.3% year-over-year, shy of the 3.4% consensus estimate. This went against the Bank of Japan’s view that prices will decelerate, likely strengthening expectations of policy normalization.

Sri Lanka’s central bank signaled it will pause after cutting interest rates for a fourth time this year as the economy gradually recovers from its unprecedented crisis and inflation bottoms out.

Elsewhere in Asia, data set for release includes Taiwan money supply. In the US, manufacturing PMI data will be released later Friday.

Key events this week:

• Germany IFO business climate, Friday
• US S&P Global Manufacturing PMI, Friday
• Black Friday, traditional kick-off for the US holiday shopping season
• ECB’s Christine Lagarde speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures were little changed as of 1:47 p.m. Tokyo time
• Japan’s Topix rose 0.6%
• Australia’s S&P/ASX 200 rose 0.2%
• Hong Kong’s Hang Seng fell 1.4%
• The Shanghai Composite fell 0.5%
• Euro Stoxx 50 futures were little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0901
• The Japanese yen rose 0.1% to 149.40 per dollar
• The offshore yuan was unchanged at 7.1522 per dollar

Cryptocurrencies

• Bitcoin rose 0.3% to $37 354.22
• Ether was little changed at $2,068.4

Bonds

• The yield on 10-year Treasuries advanced five basis points to 4.46%
• Japan’s 10-year yield advanced four basis points to 0.765%
• Australia’s 10-year yield advanced seven basis points to 4.55%

Commodities

• West Texas Intermediate crude fell 0.9% to $76.44 a barrel
• Spot gold was little changed

© 2023 Bloomberg