Asia stocks mixed on China data beat, Middle East war: markets wrap
Asian stocks fluctuated as traders weighed better-than-expected China data against intensifying Middle East tensions. The Bank of Japan announced unscheduled bond purchases to stem a rise in yields.
Hong Kong’s Hang Seng China Enterprises Index pared losses as China’s economic growth and retail sales suggested the economy is finding a foothold. The report gave a brief boost across Asian stocks including Australia and South Korea, though mainland China’s benchmarks remained in the red.
The onshore and offshore yuan strengthened, crude oil extended gains and copper added 0.7%. An index of China’s property developers headed for its lowest since 2009, as stress in the sector continues to rise amid slumping home sales and deepening debt woes for major developers.
“Finally some decent data for the yuan. The retail spending beating expectations in particular is notable,” said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group. “The property sector remains weak, but overall today’s data provide an early sign that the various support measures may be starting to have an effect.”
The BOJ’s announcement came after Japan’s 10-year yield touched a fresh decade-high, following a jump in US yields. Japan’s sovereign debt has faced renewed selling pressure amid speculation that the central bank will tweak its ultra-easy monetary policy sooner rather than later.
Treasuries steadied in early Asian trading after two-year yields hit the highest since 2006 in the previous session as strong US data reinforced the higher-for-longer rates narrative. Swap contracts tied to Fed rate decisions showed traders are pricing in more than 60% odds that policymakers will raise interest rates by a quarter percentage point in January.
US retail sales exceeded all forecasts and industrial production strengthened last month, fresh evidence of a resilient American consumer whose spending is helping stabilize manufacturing. The reports prompted a slew of economists, from Goldman Sachs to JPMorgan Chase & Co. and Morgan Stanley, to boost their tracking estimates for third-quarter gross domestic product.
“There is a lot going on in the bond markets and the global geopolitics around the whole world,” Nancy Davis, founder and chief investment officer at Quadratic Capital Management, said on Bloomberg Television. “It’s hard to keep up with everything, but there is a lot of movement. The daily volatility that we’re seeing in the Treasury market is extreme.”
Oil extended gains to advance 2.4%, and gold edged up following the explosion at a Gaza hospital that left hundreds dead. President Joe Biden suspended a visit to Jordan after the country cancelled plans for a summit with Egyptian and Palestinian leaders.
Israel blamed a failed missile from militant group Palestinian Islamic Jihad for the blast, potentially the deadliest since the killing of 1,300 Israelis in the attack of 7 October by Hamas, which is designated a terrorist organisation by the US and European Union. The Pentagon said it didn’t have information on who was responsible and the US called for an investigation.