China slows Asia stocks advance: Markets wrap

Chinese equities fluctuated, weighing on gains in Asia, while Nvidia Corp slid in US after-hours trading on a report that the Biden administration was considering further curbs on exports of powerful chips used to train artificial intelligence. The Australian dollar slumped as soft inflation data damped rate-hike bets.

The broader picture in stocks was mixed, with a gauge of Asian shares up 0.5%. Rallies in Japan and Australia contrasted with small-but-choppy moves in Hong Kong and a modest decline in Shanghai’s benchmark. Futures for European shares rose while contracts for the S&P 500 and Nasdaq 100 retreated.

Tech megacaps had earlier led a rebound in US equities after data showed strength in US consumer confidence and home sales. Tesla Inc. rallied after a 6% plunge, Snowflake jumped on an artificial intelligence-related partnership with Nvidia Corp. and Facebook’s parent Meta Platforms gained as Citigroup lifted its target.

Yet the data showing economic resilience also underscored the likelihood that the Federal Reserve has further to go in tightening monetary policy. That pushed Treasury yields higher Tuesday. They steadied in Asia trading Wednesday.

Yield premiums on Asia ex-Japan’s investment-grade dollar notes were headed for a second day of declines as the surprisingly strong US economic data eased investor concerns about recession.

In currency markets, the Australian dollar slid as much as 1% before paring some of the drop. Meanwhile, the yen strengthened away from the closely-watched 145 level versus the dollar after Japan’s top currency official said authorities will respond should there be excessive foreign exchange moves. The offshore yuan fell slightly after the People’s Bank of China set its daily reference rate for the managed currency in line with estimates.

The longer-term market impact of more US curbs on technology sales to China was unclear.

“The report of US considering more restrictions on chip exports to China may have hurt sentiment,” said Vey-Sern Ling, managing director at Union Bancaire Privee in Singapore.

Robert Lea, an analyst at Bloomberg Intelligence, said further restrictions could delay AI developments by Chinese firms without changing things significantly in the long run. “Chinese AI firms may also be able to source dedicated AI chips from third party countries,” said Lea. “So I think it will be hard for US to enforce the regulations.”

Later Wednesday, the focus will turn back to a gathering in Portugal and a panel discussion featuring the chiefs of the Fed, the European Central Bank, the Bank of Japan and the Bank of England.

After that comes the results of the Fed’s annual stress test of the banking industry. Analysts largely expect banks to sail through the tests even as regulators explore more stringent requirements in the aftermath of a few collapses in the financial industry.

Elsewhere in markets Wednesday, oil rose as investors weighed the outlook for monetary policy and a mixed industry report on US crude stockpiles. Gold inched higher.

Key events this week:

• US wholesale inventories, goods trade balance, Wednesday
• Fed to unveil results of annual banking industry stress test, Wednesday
• Policy panel with ECB’s Christine Lagarde, Fed Chair Jerome Powell, BOJ’s Kazuo Ueda and BOE’s Andrew Bailey, Wednesday
• Eurozone economic confidence, consumer confidence, Thursday
• US GDP, initial jobless claims, Thursday
• Atlanta Fed President Rafael Bostic speaks, Thursday
• China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday
• US personal income and spending, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 1:35 p.m. Tokyo time. The S&P 500 rose 1.15%
• Nasdaq 100 futures fell 0.4%. The Nasdaq 100 rose 1.75%
• Japan’s Topix rose 1.7%
• Australia’s S&P/ASX 200 rose 1.1%
• Hong Kong’s Hang Seng fell 0.1%
• The Shanghai Composite fell 0.5%
• Euro Stoxx 50 futures rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%
• The euro fell 0.1% to $1.0947
• The Japanese yen was little changed at 144.00 per dollar
• The offshore yuan fell 0.2% to 7.2359 per dollar
• The Australian dollar fell 0.7% to $0.6640

Cryptocurrencies

• Bitcoin fell 0.6% to $30 461.53
• Ether fell 1.3% to $1,868.11

Bonds

• The yield on 10-year Treasuries was little changed at 3.76%
• Japan’s 10-year yield advanced two basis points to 0.390%
• Australia’s 10-year yield declined three basis points to 3.90%

Commodities

• West Texas Intermediate crude rose 0.5% to $68.06 a barrel
• Spot gold was little changed