Stocks falter as lockdowns in China weigh; the yen wallows

A man wearing a protective mask, amid the coronavirus disease (COVID-19) outbreak, walks past an electronic chart displaying the Russian Trading System (RTS) Index, Japan’s Nikkei Index and the Dow Jones Industrial Average outside a brokerage in Tokyo, Japan, February 25, 2022. REUTERS/Kim Kyung-Hoon

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SINGAPORE/HONG KONG, April 20 (Reuters) – Most Asian stock markets rose on Wednesday, following overnight gains on Wall Street, but trading was choppy as investors grappled with high U.S. yields and China’s cautious economic policy in the face of pandemic shutdowns.

In a sign of the odd mood, the Japanese yen gained against the dollar, after falling almost every session over the past two weeks and repeatedly setting new 20-year lows, while spot gold rallied. fell 0.5% to a one-week low, driven by higher yields.

MSCI’s broadest Asia-Pacific ex-Japan equity index (.MIAPJ0000PUS) rose 0.6%, its first positive session in a week, buoyed by gains in Hong Kong (.HSI), which added 0 .8%, and Australia (.AXJO), which was approaching a record high, led by a 25% jump in Ramsay Health Care (RHC.AX) following a takeover bid of private equity giant KKR. Read more

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The Japanese Nikkei (.N225) rose 0.9%, mirroring other markets in the region that track Wall Street gains, where all three major benchmarks had their best days in more than a year. months, helped by several strong earnings results. The Nasdaq (.IXIC) closed up 2.2%.

That seemed to be the case for the stock rally, however, as Nasdaq futures fell nearly 1% in Asian trade, led by a drop in Netflix shares (NFLX.O) after the market when the company announced its first decline in subscriptions in a decade.

S&P500 futures fell 0.4%, but EUROSTOXX 50 futures rose 0.2% and FTSE futures gained 0.15%.

China bucked the regional trend with its blue chips (.CSI300) losing 0.83% after the central bank kept benchmark lending rates unchanged, despite frequent government pledges to support a slowing economy hit by the worst COVID-19 outbreak in two years. Read more

The move, on the other hand, helped the Chinese yuan rally after hitting its lowest level since October at the start of trading.

“Investors were looking for stimulus from China but the PBOC failed to deliver today,” Carlos Casanova said. “Markets will inevitably interpret this negatively with the shutdowns extending into April and beyond, meaning the worst months for economic data are ahead of us.”

But he said the PBOC’s decision “was not entirely a surprise as it fears that if it eases at this stage, firstly, it will have little effect on the economy given the number of people locked in their homes, and second, it could be detrimental if it leads to a wider rate differential with the United States, which could push outflows.”

The yield on a heavily traded Chinese 10-year government bond contract fell below the US 10-year Treasury yield for the first time since 2010 earlier this month, and Chinese 10-year yields were hovering last around 2.85%.

Benchmark 10-year Treasury yields were a hair’s breadth of 3% on Wednesday – although little changed that day – and inflation-protected yields were in positive territory for the first time since 2020. .

Yield differentials are also a factor for Japan, where the central bank on Wednesday offered to buy an unlimited amount of 10-year Japanese government bonds (JGBs) at 0.25%, in its third move since February. to defend its performance objective.

The Bank of Japan is expected to stick to its ultra-loose stance for some time as the Federal Reserve and others hike rates sent the yen faltering against the dollar, but the dollar faltered. fell 0.2% on the yen on Wednesday amid some concerns that intervention – verbal or otherwise – by the Japanese authorities could cause a rebound.

Elsewhere in the currency markets, the war in Ukraine kept the euro stuck and it last bought $1.3025.

Oil prices rebounded on Wednesday from steep losses in the previous session as concerns over tight supplies from Russia and Libya dominated.

Brent crude futures rose 0.7% to $108 a barrel.

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Reporting by Tom Westbrook in Singapore and Alun John in Hong Kong; Editing by Himani Sarkar and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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