Asia Stocks Climb, Japan's Bond Yields Head Higher: Markets Wrap

FILE PHOTO: Men look at an electronic board showing stock information at a brokerage house in Beijing, China, January 5, 2016. REUTERS/Kim Kyung-Hoon/File Photo

Asian equities rose and the dollar strengthened as investors sifted through the latest news on the U.S.-China trade front and positive results from Apple Inc. Bonds fell as Japanese yields climbed higher after the central bank said it would allow more flexibility in yield movements.

Stocks climbed in Japan and South Korea, while they drifted elsewhere in the region. In a move seen as pressuring China back to the negotiating table, the Trump administration will propose raising to 25 percent its planned 10 percent tariffs on $200 billion in Chinese imports, three people familiar with the internal deliberations said. Earlier, the S&P 500 Index capped a fourth monthly gain after Bloomberg reported that the U.S. and China were trying to restart talks aimed at averting a full-blown trade war. The offshore yuan slipped as China weakened its fixing for the currency to the lowest since May 2017.

“The tariff issue is ongoing, I think it’s a negotiating tactic,” Nick Griffin, chief investment officer at Munro Partners, said on Bloomberg Television. “How much we take of this as real and affecting earnings is questionable at this stage. In terms of an actual earnings effect, it’s not that big at the moment, it’s mainly just sentiment and risk appetite and for that it’s a moving feast.”

Central banks remained in focus after the Bank of Japan tweaked its policy settings Tuesday, with the Bank of England expected to hike rates Thursday. The yen held most of its losses from yesterday, when the BOJ move disappointed those who had seen a chance of an outright hike in the bond-yield target. Meanwhile, the Federal Reserve is expected to hold its fire at its meeting Wednesday.

Elsewhere, Apple’s Taiwanese suppliers such as Hon Hai Precision Industry Co. advanced after the company projected sales that beat analysts’ estimates. Crude added to a monthly decline on wagers for higher production.

Here are some key events coming up this week:

The U.S. Treasury is set to release its funding program for the next three months on Aug. 1. Earnings season continues with Berkshire Hathaway, Barclays, Tesla, Toyota, BMW, and Rio Tinto among companies reporting results. Central banks in the U.S., U.K., Brazil and India are still to meet this week. The Bank of England is expected to hike even amid Brexit gloom. The Fed is seen standing pat, as is Brazil’s central bank. The RBI will probably raise its benchmark at its meeting Wednesday. The U.S. jobs report is on Friday, and is predicted to show a healthy labor market, with 193,000 new jobs, and an unemployment rate slipping back to 3.9 percent.

These are the main moves in markets: Stocks

Topix index jumped 1 percent as of 2:02 p.m. in Tokyo. Hong Kong’s Hang Seng swung between gains and losses. The Shanghai Composite slid 0.3 percent. Futures on the S&P 500 Index were flat. Futures on the Nasdaq 100 advanced 0.3 percent. Futures on the U.K.’s FTSE 1000 index lost 0.3 percent.

Currencies

The yen slipped 0.1 percent to 111.97 per dollar. The offshore yuan slipped 0.4 percent to 6.8324 per dollar. The euro held at $1.1677. The Bloomberg Dollar Spot Index rose 0.2 percent.

Bonds

The yield on 10-year Treasuries rose one basis point 2.97 percent. Australia’s 10-year bond yield rose 6 basis points to 2.71 percent. Japan’s 10-year yield rose four basis points to 0.1 percent.