Equities rise, led by China; Aussie slides on RBA: Markets wrap

Stocks rose Tuesday as a rally in the shares of Chinese state-owned enterprises injected strong upward momentum into the Asian trading session.

Australia’s dollar and government bond yields slid after the central bank said inflation appeared to have peaked. The nation’s stocks advanced on the prospect that policymakers are getting closer to the end of a cycle that has brought 10-straight interest-rate hikes.

Moves in other major currencies and Treasuries remained subdued within narrow ranges as traders await more cues from Chinese policymakers and Federal Reserve Chair Jerome Powell. The rate on 10-year US government debt remained just below the closely watched 4% level. A gauge of greenback strength was down 0.1%.

Investors continue to weigh the impact of China’s modest growth target — which comes with the silver lining of less pressure on inflation — along with the likelihood of more interest rate hikes in economies including the US. Powell will face Congress twice this week, beginning later Tuesday.

The Hang Seng China Enterprises Index jumped as much as 2.4% while the Hang Seng Index climbed as much as 2% before gains in both gauges moderated. The moves came after general manager of the Shanghai Stock Exchange called for SOEs to have better access to funding from the market. The remarks were made during an interview with the Shanghai Securities News on the sidelines of the gathering of Chinese leaders in Beijing.

Later Tuesday, the Fed’s Powell will begin two days of testimony before Senate and House committees. He’ll have the chance of telegraphing how much more policy tightening he thinks is needed, ahead of a pivotal jobs report on Friday and the next US rates decision on March 22.

The current lack of traction for US equity markets shows many investors are concluding a recent rally was probably overdone, with recession risks lingering as central banks worldwide indicate they’re unlikely to soon pivot away from strict monetary tightening.

While the peak in commodities inflation may have already passed, and there are some encouraging signs in terms of food and other goods, there are still significant price pressures, said Henrietta Pacquement, head of the global fixed-income team at Allspring Global Investments.

“What is more persistent is what we are seeing on the services side and that may drag on a little longer,” she said on Bloomberg Television. Pacquement also cautioned that the outlook through 2023 is unclear. “There is a slim window for a no-landing of sorts but I do think you have to have the recession scenario in mind as well.”

Elsewhere in markets, oil rallied as a shale executive projected America’s most prolific basin will soon peak. China’s tempered economic forecast limited crude’s upside. Gold edged higher.

Key events this week:

• US wholesale inventories, consumer credit, Tuesday
• Fed Powell’s semiannual Monetary Policy Report to the Senate Banking Committee, Tuesday
• Euro area GDP, Wednesday
• US MBA mortgage applications, ADP employment change, trade balance, JOLTS job openings, Wednesday
• Fed Chair Powell’s semiannual Monetary Policy Report to the House Financial Services Committee, Wednesday
• Canada rate decision, Wednesday
• EIA crude oil inventories, Wednesday
• China CPI, PPI, Thursday
• US Challenger job cuts, initial jobless claims, household change in net worth, Thursday
• Bank of Japan policy rate decision, Friday
• US nonfarm payrolls, unemployment rate, monthly budget statement, Friday

Some of the main moves in markets :

Stocks

• S&P 500 futures rose 0.2% as of 1:17 p.m. Tokyo time. The S&P 500 was little changed on Monday
• Nasdaq 100 futures rose 0.4%. The Nasdaq 100 was little changed on Monday
• Euro Stoxx 50 futures rose 0.1%
• Japan’s Topix index rose 0.4%
• Australia’s S&P/ASX 200 Index rose 0.5%
• Hong Kong’s Hang Seng Index rose 1.2%
• The Shanghai Composite rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0691
• The Japanese yen was little changed at 135.95 per dollar
• The offshore yuan was little changed at 6.9430 per dollar
• The Australian dollar fell 0.3% to $0.6709

Cryptocurrencies

• Bitcoin rose 0.3% to $22 466.93
• Ether rose 0.6% to $1,576.04

Bonds

• The yield on 10-year Treasuries was little changed at 3.96%
• Australia’s 10-year yield declined seven basis points to 3.69%

Commodities

• West Texas Intermediate crude rose 0.3% to $80.68 a barrel
• Spot gold was little changed