Asia’s major stock indexes returned mixed results on Wednesday with many traders’ eyes fixed on this week’s big data releases and their likely impact on US interest rates.
China’s stumbling recovery and the chances of more stimulus measures from Beijing also distracted investors but in Japan the story was a little different as its benchmark index closed at its highest in more than 33 years.
Tokyo tracked an upbeat session on Wall Street, with Toyota Motor surging as investors scooped up index heavyweights amid a weaker yen.
The Nikkei index jumped 1.47% to end at 33,502.42, its highest close since March 1990, in a four-day winning streak. The broader Topix advanced 1.31% to 2,294.53.
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The S&P 500 and Nasdaq reached their highest closes in 14 months overnight, as data showing consumer prices rose modestly in May boosted bets that the Federal Reserve will not raise interest rates on Wednesday.
Toyota Motor surged 6% after jumping 5% on Tuesday, as shareholders voted down an unprecedented resolution on the automaker’s climate lobbying and backed its board at an annual general meeting (AGM).
Chinese stocks dipped, while Hong Kong shares seesawed in a narrow range, as investors anticipated more rate cuts and policy stimulus to support the country’s economic recovery.
China’s new bank lending rose to 1.36 trillion yuan ($189.83 billion) in May, data from the People’s Bank of China (PBOC) showed on Tuesday, up from April but missing analysts’ estimates.
China’s central bank lowered a short-term lending rate for the first time in 10 months on Tuesday to restore market confidence.
The market expects that the next adjustment to rates could come as soon as Thursday, when the central bank is due to roll over 200 billion yuan in medium-term lending facility (MLF) loans.
The Shanghai Composite Index dipped 0.14%, or 4.68 points, to 3,228.99, while the Shenzhen Composite Index on China’s second exchange edged up 0.25%, or 5.00 points, to 2,038.80.
Hong Kong-listed tech giants advanced 1.6% but the Hang Seng Index dropped 0.58%, or 113.00 points, to 19,408.42 while the Hang Seng China Enterprises Index fell 0.63%.
US Treasuries Climb
Elsewhere across the region, in earlier trade, Sydney, Singapore and Taipei were all on the rise, though Seoul and Wellington struggled.
MSCI’s broadest index of Asia-Pacific shares outside Japan were last 0.2% lower, after surging 1.1% in the prior session to the highest in two months.
Overnight, the much-watched US CPI report showed prices barely rose in May, with just a 0.1% increase from the prior month. On an annual basis, consumer prices rose 4%, the smallest in more than two years, slowing from April’s 4.9%.
That led traders to firm up expectations of a rate pause by the Fed to 94% when it concludes a two-day policy meeting on Wednesday, but they are also bracing for the possibility of a hawkish surprise, with a 60% probability priced in for a hike in July, according to the CME FedWatch Tool.
Perhaps reflecting some of those concerns, two-year Treasury yields hit 4.7070% overnight, the highest since March, before easing 4 basis points to 4.6519% in Asian hours.
The benchmark 10-year yields also climbed to the highest in two-and-a-half weeks at 3.8450%. They were last down 3 basis points to 3.8056%.
Dollar Under Pressure
Persisting inflation pressures elsewhere are keeping markets jittery. Data showing a rapid pick-up in UK wage growth in the three months to April could complicate matters for the Bank of England, which is set to debate its monetary policy decision next week.
Short-dated German yields jumped to a 3-month high overnight as investors looked to the rate decision from the European Central Bank on Thursday. It is expected to raise rates by another quarter-point and again in July before pausing for the rest of the year.
The US dollar remained pressured in a narrow range at 103.29 against its major peers, just a touch above a three-week low that it hit overnight.
Oil prices reversed earlier losses after receiving a 3% boost on China’s policy rate cut. US crude futures steadied at $69.42 per barrel, while Brent crude futures rose 0.2% to $74.41 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 1.47% at 33,502.42 (close)
Hong Kong – Hang Seng Index < DOWN 0.58% at 19,408.42 (close)
Shanghai – Composite < DOWN 0.14% at 3,228.99 (close)
London – FTSE 100 > UP 0.08% at 7,600.55 (0934 GMT)
New York – Dow > UP 0.43% at 34,212.12 (Tuesday close)
- Reuters with additional editing by Sean O’Meara
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