HONG KONG (Reuters) – Mainland China and Hong Kong stocks fell on Thursday, dragged down by worries about the Chinese economy, but longer-term falling US Treasury yields supported other benchmark indicators.
A 0.78% drop in Hong Kong and a 0.36% drop in blue-chip stocks in mainland China brought MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.22%.
But stock indices in Australia and Korea rose, while Japan’s Nikkei rose 0.81%. Nasdaq futures rose 0.6% and S&P500 futures rose 0.4%.
The 10-year yield was last at 2.8455%, a rapid rise in morning trade in Asia, but it was still bruised after dropping overnight from a high of 2.981% in early trading on Wednesday.
“I think we’re still going around 3% for 10-year Treasuries, and I think it was a bit of a bit of profit taking,” said Rob Carnell, head of research for Asia Pacific at ING.
Carnell said the drop in bond yields may have provided some support to stocks overnight, with the S&P500 broadly flat during the day despite the ugly picture of the technology.
“Stock futures are looking positive, with Asian markets also showing some signs of positive risk appetite in the near term,” he added.
The tech giant Nasdaq fell 1.22%, dragged down by Netflix, which fell 35.1% after reporting a sudden drop in subscribers. The Dow Jones Industrial Average rose 0.71%.
China was the focus of investors again, after it surprised markets on Wednesday by keeping benchmark lending rates unchanged, despite repeated government pledges to support a sluggish economy hit by the worst outbreak of COVID-19 in two years.
However, the Chinese central bank set the mid-point rate for the yuan at its lowest level since November on Wednesday, before announcing the lending rate. He also kept it low until Thursday.
“The stabilization of the Chinese yuan reflects an acknowledgment that things are not going well in China, and that they need more support, but they have refrained from doing that with interest rates. They do not want to push the yuan to a level much weaker than they want, but they have decided to restore some recent strength” Carnell said.
Lower yields dragged the dollar lower, with the dollar index down 0.65% on Wednesday as the euro and the pound managed to regain ground. FRX
The dollar index was last at 100.44, down from a nearly two-year high of 101.03 the day before.
The dollar rose 0.38% against the yen to 128.3 in early trading Thursday, though, as Wednesday’s recovery in the yen – its first session of gains against the dollar in nearly two weeks – proved short-lived.
The yen was hurt by the Bank of Japan which kept yields low while interest rates rose in the US.
Sanjaya Panth, deputy director of the IMF’s Asia and Pacific Department, told Reuters late on Wednesday there was no need for Japan to change course.
“The recent declines in the yen have been fundamentally driven and will not be a reason for Japan to change its economic policy, including the very low interest rates of the central bank,” Panthe said.
Oil rose again in early trading on Thursday after a mixed few days, with Brent crude futures up 0.67% to $107.48 a barrel, and US crude rising 0.54%.
Analysts at ANZ said investors are weighing potential supply disruptions against demand expectations.
“The International Monetary Fund’s cut in global growth due to the Ukraine crisis is hampering the prospects for oil demand… On the other hand, pressure is mounting on Europe to impose sanctions on Russian oil.”
And spot gold fell 0.14 percent to $ 1954.7 an ounce.