Asian equities rose as gains by Hong Kong developers helped overcome a pause in the global stock rally. Australia’s dollar jumped after the central bank surprised markets by raising interest rates above estimates to combat inflation.
(Bloomberg) — Asian equities rose as gains by Hong Kong developers helped overcome a pause in the global stock rally. Australia’s dollar jumped after the central bank surprised markets by raising interest rates above estimates to combat inflation.
An Asia stock benchmark climbed as the Hang Seng Index advanced as much as 1.4%, supported by a rise in the shares of real estate developers on speculation of new support measures for the sector. Both indexes subsequently pared gains.
Contracts for US benchmarks were steady after tech shares led the S&P 500 down Monday, with Apple Inc. wiping out gains of as much as 2% as investors parsed the potential of a new mixed-reality headset.
The Aussie gained as much as 1% and the policy-sensitive three-year government note yield was around six basis points higher after the Reserve Bank of Australia hiked its benchmark rate by 25 basis points to 4.1%. The RBA said inflation was still too high and some further tightening of monetary policy may be required. Shares in Australia extended losses.
The market should fully price another hike by the RBA, according to Tim Baker, head of macro research at Deutsche Bank in Sydney, while ANZ Banking Group Limited strategist John Bromhead said he thinks “the message from today is the same for all central banks: combating generational high levels of inflation will be an ongoing challenge.”
Meanwhile, the dollar weakened against all of its Group-of-10 peers and the yield on the 10-year Treasury was little changed for a second day. Shorter-end US rates edged up after slipping Monday when a report showed the US services sector nearly stagnated in May, causing a re-evaluation of the Federal Reserve’s interest-rate hike path.
Oil declined as traders weighed the outlook for supply and demand following Saudi Arabia’s pledge for extra supply cuts.
The US Treasury on Monday began its bill issuance flood that saw buyers storming into the upsized three- and six-month auctions, a move that many have expected will drain liquidity from the system.
Any move by the government or the Fed that can risk liquidity in the system “is something that will probably keep us in a range-bound mode until we see where it all lands, including the Fed’s final decision on rates,” Sylvia Jablonski, CEO and chief investment officer at Defiance ETF, said on Bloomberg Television.
Elsewhere, gold was steady on Tuesday after advancing 0.7% in the previous session.
Key events this week:
- Rate decision in Poland, Tuesday
- China forex reserves, trade, Wednesday
- US trade, consumer credit, Wednesday
- Canada rate decision, Wednesday
- EIA crude oil inventory data, Wednesday
- Eurozone GDP, Thursday
- Rate decisions in India, Peru, Thursday
- Japan GDP, Thursday
- US wholesale inventories, initial jobless claims, Thursday
- China PPI, CPI, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures were little changed as of 6:55 a.m. London time. The S&P 500 fell 0.2%
- Nasdaq 100 futures were little changed. The Nasdaq 100 was little changed
- Euro Stoxx 50 futures were little changed
- Japan’s Topix rose 0.7%
- Australia’s S&P/ASX 200 fell 1%
- Hong Kong’s Hang Seng rose 0.3%
- The Shanghai Composite fell 0.4%
- Euro Stoxx 50 futures were little changed
Currencies
- The Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.1% to $1.0729
- The Japanese yen was little changed at 139.46 per dollar
- The offshore yuan was little changed at 7.1201 per dollar
- The Australian dollar rose 0.7% to $0.6664
- The British pound was little changed at $1.2446
Cryptocurrencies
- Bitcoin rose 0.5% to $25,778.35
- Ether rose 0.6% to $1,815.72
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.70%
- Japan’s 10-year yield declined one basis point to 0.425%
- Australia’s 10-year yield advanced two basis points to 3.80%
Commodities
- West Texas Intermediate crude fell 0.6% to $71.69 a barrel
- Spot gold fell 0.2% to $1,958.79 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Jason Scott, Joanna Ossinger and Matthew Burgess.
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