Japan Stocks Extend Gains on GDP Data; Yuan Falls: Markets Wrap

Asia’s markets traded mixed Wednesday, with Japan equities extending their winning streak on better-than-expected economic growth, while the offshore yuan and China’s stocks fell as data continued to disappoint.

(Bloomberg) — Asia’s markets traded mixed Wednesday, with Japan equities extending their winning streak on better-than-expected economic growth, while the offshore yuan and China’s stocks fell as data continued to disappoint.

Japan stocks led gains in Asia, with the Topix index advancing for a fourth day to reach a fresh high since August 1990. The Nikkei 225 index was set to breach a key 30,000 level. The nation may be on the cusp of a rare bull market, according to Goldman Sachs Group Inc. The government said Wednesday gross domestic product expanded at the fastest pace in three quarters as a further easing of pandemic regulations boosted consumer spending.

The offshore yuan, meanwhile, fell to as weak as 7.0162 to the US currency, the first time it has breached the 7 level since late December. Shares in the mainland and Hong Kong all declined.

A slew of weaker-than-expected data from China, from industrial output to retail sales and home prices, has raised concerns over the strength of recovery in the world’s second biggest economy and spurred calls for more policy stimulus to bolster growth. 

“Right now when we’re talking to both onshore and offshore investors, the sentiment is actually quite weak,” Marcella Chow, global market strategist at JPMorgan Asset Management, said on Bloomberg Television. “We do hope the Chinese central banks or actually authorities might change from more the wait-and-see to a bit more proactive easing.”

An earnings release by Tencent Holdings Ltd. later Wednesday may aid sentiment in China. The tech giant is expected to post its biggest rise in quarterly revenue since 2021 on a gradual recovery in spending and advertising.

Euro Stoxx 50 futures edged lower ahead of the release of inflation data for the Eurozone. Another hot print will add to policymakers’ concerns around inflation persistence.

US stock futures rose slightly in Asia after the Nasdaq 100 closed up just 0.1% and the broader S&P fell, following a rapid decline in the final minutes of the session. Debt-ceiling talks between White House and congressional aides are set to intensify as negotiators seek a framework agreement to review upon President Joe Biden’s return from a truncated trip to Asia.

Japan Auction 

The Bloomberg Dollar Spot Index was little changed despite the currency strengthening against most emerging Asia currencies. 

Japanese bonds rallied after an auction of 20-year debt showed strong demand from investors.

Treasuries steadied after US government debt fell across the curve on Tuesday, with the 30-year yield climbing to 3.90% — the highest since the run-up to the banking turmoil that erupted in early March. 

Richmond Federal Reserve President Thomas Barkin said he was still looking to be convinced that inflation has been defeated and that he’d support raising rates further if needed. Cleveland Fed President Loretta Mester said the central bank is unable to do much about slow long-term economic growth, but can “do its part” by curbing prices.

Elsewhere, oil ticked lower amid China’s lackluster recovery that overshadowed a bullish outlook from the International Energy Agency and positive US data. Gold remained below $2,000.

Key events this week:

  • Eurozone CPI, Wednesday
  • BOE Governor Andrew Bailey delivers keynote speech, Wednesday
  • US housing starts, Wednesday
  • US initial jobless claims, Conference Board leading index, existing home sales, Thursday
  • Japan CPI, Friday
  • ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
  • New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures were little changed as of 6:33 a.m. London time. The S&P 500 fell 0.6%
  • Nasdaq 100 futures rose 0.1%. The Nasdaq 100 rose 0.1%
  • Euro Stoxx 50 futures fell 0.2%
  • Japan’s Topix index rose 0.3%
  • Hong Kong’s Hang Seng Index fell 1.2%
  • China’s Shanghai Composite Index fell 0.5%
  • Australia’s S&P/ASX 200 Index fell 0.4%

Currencies

  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0861
  • The Japanese yen fell 0.3% to 136.75 per dollar
  • The offshore yuan fell 0.2% to 7.0127 per dollar
  • The Australian dollar fell 0.2% to $0.6642
  • The British pound fell 0.1% to $1.2470

Cryptocurrencies

  • Bitcoin rose 0.2% to $27,001.35
  • Ether was little changed at $1,820.1

Bonds

  • The yield on 10-year Treasuries declined one basis point to 3.52%
  • Japan’s 10-year yield declined 3.5 basis points to 0.355%
  • Australia’s 10-year yield advanced two basis points to 3.42%

Commodities

  • West Texas Intermediate crude fell 0.5% to $70.50 a barrel
  • Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Richard Henderson and Wenjin Lv.

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