Business Maverick

Business Maverick

Asian stocks rise on reports of Chinese bond sale: markets wrap

Asian stocks rise on reports of Chinese bond sale: markets wrap
A trading bell at the Tokyo Stock Exchange (TSE), operated by Japan Exchange Group in Tokyo, Japan, on 19 April 2024.

Asian stocks clawed back earlier losses as reports China is planning to start selling the first batch of its 1 trillion yuan ($138-billion) issue of ultra-long bonds boosted optimism the funds will help bolster the economy. 

China’s shares trimmed declines while Hong Kong’s equity benchmark rose, while Japanese shares were mixed. Japan’s bonds fell after the central bank offered to purchase a smaller amount of government debt than at a previous auction. The Chinese bond issuance will include 20-year debt, 30-year notes and 50-year securities, according to people familiar.

Reports about the world’s second-largest economy drove trading on Monday. Markets initially fell in response to data showing Chinese credit shrank for the first time in April and that US President Biden is set to increase tariffs on Chinese electric vehicles, before news of the bond sale helped reverse losses. 

Global investors are keenly scrutinising comments by US officials for signs of how long the Federal Reserve will keep interest rates at elevated levels. Fed Bank of Dallas president Lorie Logan said last week it’s still too early to think about lowering borrowing costs, while Governor Michelle Bowman said she doesn’t expect it will be appropriate for the Fed to cut rates in 2024.

Bloomberg’s dollar index and benchmark 10-year Treasuries were both little changed. 

The US April inflation print on Wednesday is expected to provide the next major catalyst for trading. 

“As long as the labour market remains tight, consumer resilience could continue to dampen hopes of inflation cooling off,” said Subadra Rajappa, head of US rates strategy at Societe Generale in New York. “A resumption of the disinflationary trend is imperative for the Fed to consider cutting this year.”

Read more: High-Risk Options Bet on Bond Rally at Risk of Losing Millions

Commodities such as gold and oil are also in focus Monday after President Vladimir Putin replaced his long-serving defence minister in a surprise move as Russian forces seek to capitalise on a battlefield advantage and make advances in the war against Ukraine. The move comes just days before Putin plans to visit China and NATO military chiefs meet in Brussels. Oil edged lower in early trading while gold was little changed.

Meantime, the US escalated its concern over Israel’s conduct of its Gaza offensive, warning the Jewish state risks fueling a Hamas insurgency. US Secretary of State Antony Blinken said the Biden administration still hadn’t seen a “credible” Israeli plan for shielding civilians in an assault on Rafah nor a postwar plan.

Elsewhere this week, China delivers a policy rate decision, the Eurozone is set to report inflation and growth figures while a swath of Fed officials are due to speak including Powell. Australian jobs data is due and the nation’s government will deliver its spending plans for the year ahead. 

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