Asian stocks fluctuate based on China data, bond sell-off: Market mixed

(Bloomberg) — Asian stocks have wavered between gains and losses, with sentiment influenced by weak Chinese data and optimism over reports that the country will begin selling ultra-long bonds.

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Hong Kong’s benchmark stock index rose to its highest level since August, while mainland-listed shares mostly fell. Japanese and Australian stock indices fell. China’s 1 trillion yuan ($138 billion) ultra-long special bond issuance program will begin on Friday and will eventually include 20-, 30- and 50-year debt, according to people familiar with the matter.

News of planned debt issuance boosted sentiment after weak Chinese data published over the weekend led to initial share losses. The specter of new trade tensions between the US and China has also intensified with a report on how much President Biden is expected to increase tariffs on Chinese electric vehicles.

“We are looking at a slightly cloudy growth outlook” for China, said Sonal Desai, investment director at Franklin Templeton, in an interview with Bloomberg Television, before the news of the debt sale was published. Regardless of who is elected in the US elections in November, we will see an escalation of trade tensions between the US and China, he said.

The Bloomberg Dollar Index and benchmark 10-year Treasury bonds remained little changed. Japanese bonds fell after the central bank offered to buy a smaller amount of government debt than in a previous auction.

Investors are scrutinizing comments from U.S. officials for signs of how long the Federal Reserve will keep interest rates at high levels. Dallas Fed Bank President Lorie Logan said last week that it is still too early to think about reducing borrowing costs, while Governor Michelle Bowman said she does not expect it to be appropriate for the Fed to cut rates in 2024.

Potential key catalysts for markets this week include a decision on China’s policy rate on Wednesday and an April US inflation release on the same day.

“There is growing confidence in the Chinese market, although economic indicators do not fully support this optimism,” said Tareck Horchani, head of prime brokerage at Maybank Securities Pte. “The movement appears to be driven more by technical rather than fundamental factors.”

Read more: High-risk options bet on bond recovery at risk of losing millions

Weak Chinese data weighed on oil on Monday, with commodity traders also awaiting an OPEC+ meeting on supply policy.

The story continues

Iraqi Oil Minister Hayyan Abdul Ghani initially said over the weekend that Baghdad had cut production enough and would not agree to more. But he later said that any decision was an OPEC matter and that it would follow what the group decided. OPEC+ meets on June 1st.

Later this week, the euro area is expected to release inflation and growth numbers, while several Federal Reserve officials are expected to speak, including Chairman Jerome Powell.

US and European stock futures were little changed.

Some important events this week:

• Business confidence in Australia, Monday

• New Zealand food prices, inflation expectations, Monday

• India Trade CPI Monday

• Eurozone finance ministers meet in Brussels on Monday

• Australia Budget 2024-25, Tuesday

• Japan PPI, Tuesday

• Germany CPI, ZEW survey expectations, Tuesday

• UK jobless benefit claims, unemployment, Tuesday

• US PPI, Tuesday

• Fed Chairman Jerome Powell and Governing Council Member Klaas Knot speak on Tuesday

• China Rate Decision Wednesday

• Eurozone industrial production, GDP, Wednesday

• US CPI, Retail Sales, Business Inventories, Imperial Manufacturing, Wednesday

• Unemployment in Australia, Thursday

• Japan GDP, industrial production, Thursday

• China property prices, retail sales, industrial production, Friday

• Eurozone CPI, Friday

Actions

• S&P 500 futures were little changed as of 1:18 p.m. Tokyo time

• Nikkei 225 (OSE) futures fell 0.4%

• Japan’s Topix fell 0.4%

• Australia’s S&P/ASX 200 fell 0.3%

• Hong Kong’s Hang Seng rose 0.5%, rising for the third day in a row

• The Shanghai Compound has changed little

• Euro Stoxx 50 futures were little changed

Coins

• The Bloomberg Dollar Spot index was little changed

• The euro was unchanged at $1.0771

• The Japanese yen was little changed at 155.77 per dollar

• The offshore yuan fell 0.1% to 7.2416 per dollar

Cryptocurrencies

• Bitcoin fell 0.2% to $61,120.39

• Ether fell 1.3% to lowest level since February 18

Titles

goods

• West Texas Intermediate crude fell 0.2% to $78.07 a barrel

• Spot gold fell 0.2% to $2,356.03 an ounce

This story was produced with help from Bloomberg Automation.

–With assistance from Ishika Mookerjee.

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