Hong Kong Shares Extend Rally, Yen Climbs Further: Markets Wrap

(Bloomberg) — Hong Kong shares led gains across Asian equity markets Wednesday and US and European stock futures rose in a sign of growing risk appetite. The dollar retreated against major currencies and the yen strengthened.

(Bloomberg) — Hong Kong shares led gains across Asian equity markets Wednesday and US and European stock futures rose in a sign of growing risk appetite. The dollar retreated against major currencies and the yen strengthened.

The Hang Seng index traded as much as 2% higher to levels not seen since July, helped by a jump of more than 6% for Alibaba Group Holding Ltd. shares following news that Ant Group Co., in which the e-commerce giant holds a stake, won approval to raise $1.5 billion for its consumer unit.

Shares in mainland China edged higher and equity benchmarks in Australia and South Korea rose. European equity futures gained alongside contracts for the S&P 500 after the US index fell in Tuesday trade. Japanese equities ran against the grain to fall about 1%.

The yen inched higher following efforts by the Bank of Japan to depress yields on government debt. The dollar fell against all G-10 currencies, led by the Australian dollar, in a further signal of investor support for the Chinese economy.

The Australian 10-year yield fell as much as 11 basis points and the 10-year Treasury yield steadied after its biggest decline in more than a month. The price of oil traded in and out of negative territory after the biggest fall in more than a month in the prior session.

Recession concerns lingered, with former New York Federal Reserve President William Dudley saying that an imminent slowdown won’t be severe while investors continue to mull the impact the central bank’s tightening will have on the economy. They’ll be paying attention to the jobs report this week, as softening in the labor market remains the Fed’s focus. 

“What worries the markets going into the year is how deep the recession is likely to be,” Sam Stovall, chief investment strategist at CFRA, said on Bloomberg Television. “I think very few people believe we will miss a recession altogether, especially when we have such an inverted yield curve and now are expected to fall into an earnings recession.”

Investors were also focused on China with fledgling signs Covid infections may have peaked in some of its biggest cities. Anecdotal evidence showed the country remained in the grip of the pandemic with crematoriums overwhelmed in large cities such as Shanghai.

The prospect of a rapid reopening of China’s economy after the dismantling of Covid Zero policies may fail to materialize, according to Chris Senyek, chief investment strategist for Wolfe Research.

“In our view, there’s still a massive amount of uncertainty there, and whenever growth does begin to re-accelerate, inflation headwinds are more likely than not to offset global growth tailwinds,” he said in a note. 

Read More: China Vows to Hit Back at Nations Imposing Covid Travel Curbs

The main markets moves are:

Stocks

  • S&P 500 futures rose 0.1% as of 12:10 p.m. Tokyo time. The S&P 500 fell 0.4%
  • Nasdaq 100 futures rose 0.3%. The Nasdaq 100 fell 0.7%
  • Japan’s Topix fell 1%
  • Australia’s S&P/ASX 200 rose 1.5%
  • Hong Kong’s Hang Seng rose 2.1%
  • The Shanghai Composite rose 0.3%
  • Euro Stoxx 50 futures rose 0.2%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2%
  • The euro rose 0.2% to $1.0567
  • The Japanese yen rose 0.1% to 130.84 per dollar
  • The offshore yuan rose 0.3% to 6.9032 per dollar

Cryptocurrencies

  • Bitcoin rose 0.8% to $16,801.06
  • Ether rose 3.2% to $1,249.68

Bonds

  • The yield on 10-year Treasuries declined one basis point to 3.73%
  • Japan’s 10-year yield advanced two basis points to 0.44%
  • Australia’s 10-year yield declined 11 basis points to 3.90%

Commodities

  • West Texas Intermediate crude was little changed
  • Spot gold rose 0.4% to $1,846.40 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Vildana Hajric and Isabelle Lee.

More stories like this are available on bloomberg.com

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