Bond losses extend to Asia, Chinese stocks gain

May 09, 2024 (MLN): Asian bonds fell, echoing selling pressure in Treasuries in the prior session. Chinese shares rallied on the country’s upbeat trade data and fresh signs of property support, as Bloomberg reported.

The 10-year benchmark yields for Australia, New Zealand and Japan all increased, while those on US sovereign debt extended Wednesday’s increase after a $42 billion sale of 10-year notes received tepid demand.

The rise in Japanese yields followed a hawkish-sounding summary of opinions from the central bank’s April meeting.

Bank of Japan members discussed the potential to cut bond purchases as well as the path for future rate hikes.

The yen was steady after touching a weekly low earlier. Japan’s top currency official, Masato Kanda, said the country would be ready to take appropriate action when necessary but refrained from confirming official support in recent weeks.

A dollar index steadied following a third session of gains.

“The interest rate differential does not support a stronger yen and the Bank of Japan does need to think about closing that gap,” Charlie Jamieson, chief investment officer at Jamieson Coote Bonds Pty Ltd., told Bloomberg Radio.

That said, “we don’t feel that there is a rampant hiking cycle” in Japan.

Chinese stocks helped brighten the mood in an otherwise mixed session for the region, with gains in Japan and declines in Australia and South Korea.

US futures edged lower after the S&P 500 and Nasdaq 100 indexes ended Wednesday largely flat.

A key gauge of Chinese shares listed in Hong Kong rose as much as 1.7%, as hopes grew that a recovery of the world’s No. 2 economy is gathering momentum after data showed both exports and imports beat forecasts in April.

Adding to the optimism was a major eastern city’s decision to remove home-buying curbs, the latest sign of Beijing’s widening campaign to rescue an ailing housing sector. A Bloomberg index tracking Chinese developers surged 8.1%.

Some analysts remained cautious.

“We think it’s a tactical recovery from an oversold position” in Chinese equities, Julia Wang, global market strategist at JPMorgan Private Bank, told Bloomberg Radio. “We do think that fundamentally the economy does still face challenges so most of the rally has probably already happened.”

In a sign of continued distress in China’s property sector, major developer Country Garden Holdings Co. said it cannot make an interest payment on a local bond guaranteed by a state-backed program, marking the first time that an initial deadline on such developer debt has been missed.

US-listed shares in Arm Holdings PLC fell as much as 10% in late trading following a tepid annual forecast.

Intel Corp. shares also dropped after the US revoked licenses that allowed the firm to sell chips to Huawei Technologies Co.

Airbnb Inc shares fell in post-market trade following signs of slowing growth.

Elsewhere in Asia, Malaysia will hand down a monetary policy decision, while markets in Indonesia are closed.

Japan’s latest wage figures showed pay gains have now lagged inflation every month for two years.

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