TOKYO / NEW YORK (Reuters) – Asian equities rebounded from a two-month low on Wednesday after global bond yields declined following a well-received US debt bid and as Chinese equities found a position after the recent sharp drops in political concerns.
A recent sell-off of global bonds has generally disturbed markets in terms of concerns that central banks could begin to tighten monetary growth, increased yields, raising concerns higher borrowing costs could derail a fragile global economic recovery.
Japan’s Nikkei was slightly changed, while Japan’s former Asia-Pacific stock index rose 0.2% a day after reaching a two-month low. The CSI300 index of A shares in mainland China increased by 0.4%.
Despite this, European and US equities eased slightly, with investors remaining nervous about falling bonds ahead of key inflation data and US bond auctions.
Euro Stoxx 50 futures fell 0.3%, while British futures FTSE traded 0.7% lower.
Earnings from Asian equities came after Chinese equities fell to their lowest level since mid-December the day before, ahead of a tighter policy and a slowing economic recovery.
“Markets pay full attention to bonds. Because earnings are not growing so fast right now, the high stock prices we have now will become unsustainable if bond yields rise and undermine their valuation, ”said Hiroshi Watanabe, senior economist at Sony Financial Holdings.
Yields on 10-year benchmark banknotes fell to 1.540%, reaching a high of 1.626% on Friday, after Tuesday’s $ 58 billion banknote auction in 3-year banknotes was well received.
However, many market investors remained at the limit, with the next tests of investors’ appetite for government debt to be launched later this week in the form of 10- and 30-year auctions.
“Although the bond market has stabilized slightly, pressure will remain,” said Naokazu Koshimizu, a senior strategist at Nomura Securities.
“He assessed the future monetary policy normalization of the Fed, with the Fed’s policy eventually becoming neutral. But he has not yet set a price for the chance for his policy to tighten. ”
Some investors see a real risk of an overheated US economy and higher inflation amid spending planned by US President Joe Biden’s administration, including a $ 1.9 trillion stimulus and an even bigger infrastructure initiative.
US consumer price data at 1330 GMT is expected to show a slight acceleration in global inflation in February, with analysts expecting new gains in the coming months due to the basic effects of a severe economic downturn in early 2020.
The faster launch of COVID-19 vaccines in some countries and the planned US stimulus package have helped underpin a brighter global economic outlook, the Organization for Economic Co-operation and Development said as it raised its 2021 growth forecast.
Some investors are worried that weak monetary policy could trigger inflation, although Federal Reserve Chairman Jerome Powell has so far pledged to keep interest rates low and keep his monthly $ 120 billion bond purchase.
In foreign exchange markets, the dollar was supported by expectations of a faster US economic recovery.
The euro fell 0.25% to $ 1.1871, not far from Tuesday’s three-and-a-half-month low of $ 1.18355. The yen changed hands at 108.85 per dollar after reaching a nine-month low of 109.235 the previous day.
The Australian dollar fell 0.6% to $ 0.7672 after the country’s central banker rejected market talks about anticipated rate hikes. [AUD/]
Oil prices have fallen as concerns over a supply cut in Saudi Arabia have eased.
U.S. crude futures fell 0.9 percent to $ 63.44 a barrel, far from a nearly 2 1/2-year high of $ 67.98 on Monday.
In the long run, crude oil fell 1.1% to $ 66.78 a barrel.
Reporting by Hideyuki Sano in Tokyo and Matt Scuffham in New York; Editing by Sam Holmes, Richard Pullin and Ana Nicolaci da Costa