Stocks in Asia Meander as Treasury Yields Hug 3%: Markets Wrap

FILE PHOTO: A Saudi trader observes the stock market on monitors at Falcom stock exchange agency in Riyadh, Saudi Arabia February 7, 2018. REUTERS/Faisal Al Nasser/File Photo

A rally in Asian stocks weakened on Thursday as rising U.S. Treasury yields threatened to pose a fresh test for equity investors. The dollar maintained declines against most major peers and oil extended gains.

With little in the way of new leads for equity traders to latch on to and tariff concerns set aside, Japan’s stocks shuffled into a three-month high for a second day. South Korea outperformed and Hong Kong and Chinese stocks drifted in a lackluster session. European futures tipped a muted open. The yield on 10-year Treasuries remained above the much-watched 3 percent mark after approaching its highs for the year. The yen edged higher and oil held above $71 a barrel on declining stockpiles.

Equity markets have so far remained resilient in the face of rising bond yields, suggesting investors are comfortable with the outlook for global growth even as borrowing costs rise along with trade tensions. The 10-year Treasury yield is up about 10 basis points over the past week.

The dollar remained under pressure after a report said the U.S. and Canada are unlikely to reach a deal on Nafta in Washington this week. There was little reaction in the yuan after China said it planned to cut the average tariff rate that it charges on imports from the majority of its trading partners as soon as next month. Emerging-market assets continued to rally off the lows seen earlier this month as some investors suggested the rout was overdone.

Elsewhere, the New Zealand dollar rose as economic growth topped estimates.

Here are some key events coming up this week:

European PMIs are due on Thursday. August data on U.S. existing-home sales on Thursday will show whether purchases declined for a fifth-straight month, which would be the longest streak since 2013-14. The Organization of Petroleum Exporting Countries and its allies meet in Algiers this weekend.

These are the main moves in markets: Stocks

Japan’s Topix index rose 0.1 percent at the 3 p.m. close in Tokyo. Hong Kong’s Hang Seng Index was little changed as was the Shanghai Composite Index. Australia’s S&P/ASX 200 Index dropped 0.3 percent. South Korea’s Kospi index climbed 0.7 percent. S&P 500 futures were little changed. The S&P 500 Index rose 0.1 percent. FTSE 100 Index futures ticked 0.1 percent higher. The MSCI Asia Pacific Index rose 0.2 percent. The MSCI Emerging Market Index climbed 0.3 percent after a 1.1 percent advance Wednesday.

Currencies

The yen rose 0.1 percent to 112.13 per dollar. The offshore yuan was flat at 6.8522 per dollar. The Bloomberg Dollar Spot Index fell 0.1 percent. The kiwi rose 0.6 percent to 66.54 U.S. cents. The euro bought $1.1686, up 0.1 percent.

Bonds

The yield on 10-year Treasuries held at 3.06 percent. Australia’s 10-year bond yield was steady at 2.71 percent.

Commodities

West Texas Intermediate crude rose 0.6 percent to $71.18 a barrel after surging 1.8 percent Wednesday. Gold added 0.1 percent to $1,205.21 an ounce. LME copper lost 0.3 percent to $6,104 a metric ton.

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