Japanese government bonds experienced a decline, and stocks across Asia showed mixed results as expectations for interest rate hikes gained momentum. The 10-year sovereign yield in Japan briefly surged more than 10 basis points after Governor Kazuo Ueda’s remarks on Tuesday, indicating an increasing certainty of achieving the Bank of Japan’s price projections. The comments were interpreted as hawkish, leading to a 1% drop in the Nikkei 225 index and strengthening of the yen against the dollar.
Matt Simpson, a senior market strategist at City Index, noted the strength of the Japanese yen across markets and suggested that the Nikkei’s retracement from multi-year highs was a natural correction rather than a cause for concern.
The overall sentiment in the region remained muted, with Hong Kong’s equity benchmarks trimming gains, and mainland shares slipping after a previous jump linked to hopes for a market rescue package. Alibaba Group Holding Ltd. outperformed in the stock market, supported by a report on founder Jack Ma’s stock purchase.
In the US, equities reached all-time highs for a second consecutive day, and Bitcoin rebounded after a two-day decline. Oil prices steadied amid signs of lower US inventories and tensions in the Middle East.
Key events for the week include the Bank of Canada rate decision, Eurozone S&P Global Services & Manufacturing PMI, US S&P Global Services & Manufacturing PMI, Eurozone ECB rate decision, Germany IFO business climate, and US economic indicators like GDP, initial jobless claims, durable goods, wholesale inventories, and new home sales.
Market Moves:
- S&P 500 futures rose 0.2%
- Japan’s Topix fell 0.7%
- Australia’s S&P/ASX 200 was little changed
- Hong Kong’s Hang Seng rose 0.7%
- The Shanghai Composite fell 0.2%
- Euro Stoxx 50 futures rose 0.6%
- Nasdaq 100 futures rose 0.3%
Currency and Cryptocurrency:
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0864
- The Japanese yen rose 0.3% to 147.89 per dollar
- The offshore yuan fell 0.1% to 7.1757 per dollar
- The Australian dollar was little changed at $0.6574
- Bitcoin rose 1.1% to $39,640.91
- Ether rose 0.5% to $2,213.68
Bonds and Commodities:
- The yield on 10-year Treasuries declined one basis point to 4.12%
- Japan’s 10-year yield advanced eight basis points to 0.715%
- Australia’s 10-year yield advanced four basis points to 4.23%
- West Texas Intermediate crude fell 0.1% to $74.27 a barrel
- Spot gold fell 0.3% to $2,024.20 an ounce
