Asian stocks soar as US bond yields rise and oil volatile

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HONG KONG, Nov. 24 (Reuters) – Stock markets were choppy in early Asia on Wednesday as trade was rocked by rising U.S. Treasury yields as well as oil price volatility amid cooling moves prices by the United States and other nations.

The largest MSCI Asia-Pacific stock index outside of Japan (.MIAPJ0000PUS) slipped 0.24%, while Japan’s Nikkei stock price benchmark (.N225) fell 1 , 13%, while returning from vacation and catching up with the world falls of the day before.

Oil stabilized a day after rising 3% to a week-long high, even after the United States announced it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain to try to cool prices after repeated calls for more crude failed to influence OPEC + producers. Read more

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Brent crude futures reversed initial losses to rise 0.15% to $ 82.43 per barrel and U.S. crude futures rose 0.33% to $ 78.76 per barrel .

“There’s a lot going on right now,” said Carlos Casanova, senior economist for Asia at Swiss private bank UBP.

“10-year yields are going up and the US dollar is strong, which is a bit disruptive for Asian markets as many currencies (except the Chinese yuan) will depreciate and there will be exits due to the expansion of the real market. rate differentials. “

However, “Chinese asset classes have held up relatively well,” he said, attributing strength to the People’s Bank of China in removing several hawkish references to quarterly monetary policy support on Friday, indicating support from the central bank later this year or early next year, “which will provide a floor for stocks.

Chinese blue chips (.CSI300) were on the last dish of 0.1% and are up about 0.5% so far this week, compared to a decline of almost 1% this week in the index. Asian regional reference. Hong Kong stocks (.HSI) fell 0.1%.

Overnight, 10-year US Treasury yields rose more than 5 basis points to 1.684%, while 30-year Treasury yields gained 6 basis points. Two-year U.S. Treasury yields fell after hitting their highest level since March 2020 on Monday.

“There is a risk that the Fed will accelerate the reduction (of its bond-buying stimulus program) and this in turn means that the tightening schedule can be brought forward, contributing to a stronger dollar,” said currency strategist Sim Moh Siong at the Bank of Singapore.

Investors will carefully examine the minutes of the November meeting of the US Federal Reserve board, to be released later today globally, for signs that the pace of the reduction may accelerate.

Unpaid gold that had reacted badly to the Treasury rate hike picked up a bit. The spot price was at $ 1,794, up 0.2%, but still close to Tuesday’s two-week low.

Major currencies trade largely on the basis of market expectations for central bank interest rate normalization schedules.

New Zealand’s central bank on Wednesday raised interest rates for the second time in as many months, amid mounting inflationary pressures and as an easing of restrictions on coronaviruses supported the economic activity.

However, with markets open to the possibility of a larger rise, the New Zealand dollar faltered on the news before ending slightly weaker at $ 0.6928.

Next on the agenda in Asia is the Bank of Korea (BOK), which has its political meeting on Thursday.

In a Reuters poll from November 15 to 22, all but one predicted that the BOK would raise its base interest rate (KROCRT = ECI) by 25 basis points to 1.00%, with the dissident anticipating a larger hike. Read more

Otherwise, currency markets took a break on Wednesday as the dollar largely held onto its recent gains against most of its peers thanks to rising Treasury yields.

However, the greenback managed to appreciate slightly to reach a four and a half year high at 115.22 yen.

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Reporting by Alun John; Editing by Christopher Cushing

Our standards: Thomson Reuters Trust Principles.


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