Stocks in Asia mixed on China unease; Yen tumbles: markets wrap

Stocks in Asia were mixed Tuesday with investors weighing Chinese measures to support the economy and the prospect for faster Federal Reserve policy tightening to fight inflation.

Equities were modestly higher in Japan, aided by a sinking yen. Hong Kong technology names declined on ongoing concerns over regulation. China wavered as developers dropped and investors assessed measures to tackle economic headwinds from Covid-led lockdowns. US futures gained after stocks ended little changed Monday. European contracts fell.

Treasury yields dipped after the long end declined Monday. St. Louis Fed President James Bullard said that rate increases of 75 basis points — while not the base case — shouldn’t be ruled out as the central bank needs to move quickly to combat inflation.

The yen extended its longest losing streak in at least half a century as the comments underscored a widening gap between US and Japan rates. Australian bond yields jumped. The central bank hinted rates may rise sooner due to quicker inflation and a pickup in wages growth. The dollar held an advance.

Disruptions to supply chains from China’s lockdowns and to commodity flows from the war are keeping upward pressures on central banks to act to rein in runaway prices at a time when global growth is tipped to slow. The World Bank cut its forecast for global economic expansion this year on Russia’s invasion.

“We see central banks normalizing quickly – but not slamming the brakes on the economy. This should keep real yields low and underpin equity valuations,” BlackRock Investment Institute strategists led by Wei Li, global chief investment strategist, said in a note.

In China, markets are also awaiting the release of banks’ benchmark lending rates on Wednesday after the People’s Bank of China reduced the reserve requirement ratio for most banks Friday but refrained from cutting interest rates.

The latest policy measures “have really highlighted easing is required,” Gareth Nicholson, Nomura chief investment officer and head of discretionary portfolio management, said on Bloomberg Television. “The markets don’t believe enough has been done and they’re gonna have to step it up but we think they will.”

Meanwhile, Ukrainian President Volodymyr Zelenskiy said Monday that Russian forces had begun the campaign to conquer the Donbas region in Ukraine’s east as Moscow continues moving troops and material into that part of the country.

What to watch this week:

• Earnings include American Express, China Telecom, IBM, Johnson & Johnson, Netflix, Tesla
• Chicago Fed President Charles Evans to speak, Tuesday
• EIA crude oil inventory report, Wednesday
• China loan prime rates, Wednesday
• Federal Reserve Beige Book, Wednesday
• French presidential election debate, Wednesday
• San Francisco Fed President Mary Daly, Chicago Fed President Charles Evans, due to speak, Wednesday
• Euro zone CPI, U.S. initial jobless claims, Thursday
• Fed Chair Jerome Powell, ECB President Christine Lagarde discuss global economy at IMF event, Thursday
• Manufacturing PMIs: Euro zone, France, Germany, UK, Friday
• Bank of England’s Andrew Bailey to speak, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.4% as of 1:55 p.m. in Tokyo. The S&P 500 was little changed
• Nasdaq 100 futures gained 0.6%. The Nasdaq 100 rose 0.1%
• Topix index rose 0.7%
• Australia’s S&P/ASX 200 index rose 0.5%
• Kospi index gained 1%
• Hang Seng Index fell 1.9%
• Shanghai Composite Index was little changed
• Euro Stoxx 50 futures fell 0.8%

Currencies

• The Japanese yen slumped 1% to 128.21 per dollar
• The offshore yuan was at 6.3827 per dollar
• The Bloomberg Dollar Spot Index was up 0.1%
• The euro traded at $1.0769, down 0.1%

Bonds

• The yield on 10-year Treasuries fell one basis point to 2.84%
• Australia’s 10-year bond yield rose nine basis points to 3.06%

Commodities

• West Texas Intermediate crude rose 0.5% to $108.70 a barrel
• Gold was at $1 977.28 an ounce