Market Close Mar 10

Markets eye yields as economies recover

Bond yields in focus ahead of key US auction, inflation data; Australia lags after downbeat economic message; China outperforms after data confirms manufacturing strength

Markets eye yields as economies recover
People walk by the Reserve Bank of Australia in this file photo from pre-Covid days. Image: Reuters.

(ATF) Hong Kong: Asian markets were broadly steady with China outperforming after data showed the world’s second largest economy continues to build on its recovery.

China’s producer prices rose at the fastest pace in over two years as global customers sourced more goods from the global manufacturing hub.

“We think the continued gains in PPI inflation point to further improvement in industrial profits, which supports our constructive view on manufacturing investment this year,” Barclays economists Eric Zhu, Jian Chang and Yingke Zhou said in a note.

Japan’s Nikkei 225 index was flat, Hong Kong’s Hang Seng index rose 0.47% and China’s CSI300 added 0.66% but Australia’s S&P ASX 200 slipped 0.84% after the central bank’s lower-for-longer rate view was taken to mean there were hurdles to the economic rebound. The MSCI Asia Pacific index was steady.

“The full recovery of our economy requires a further lift in business investment,” the Reserve Bank of Australia’s Governor Philip Lowe said, while adding that there is still a long way to go with the economy operating well short of full capacity.

“And on the nominal side of the economy, we have not yet experienced the same type of bounce-back that we have seen in the indicators of economic activity.”

US Treasuries caught the safe haven bid with the 10-year yield easing 3 basis points to 1.56% with the US dollar also receiving a boost, gaining 0.1% to 92 against a basket of currencies. Gold lost some of its shine easing 0.2% to $1,713 per ounce.

But the recent spike in US Treasury yields is making markets wary about piling into that trade even as the reopening progresses, the rate of vaccinations ramps up, and the labour market gathers speed in the world’s largest economy.

“There are also two crater type events the market will need to navigate later today that, if successful, could cement a short-term bounce back: the CPI print and the US 10-year auction will be keenly in focus,” Stephen Innes, Chief Global Market Strategist at Axi, said. 

“If markets emerge unscathed from those events, it may continue to relieve some short-term pressure.”

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Asia Stocks

· Japan’s Nikkei 225 index was flat

· Australia’s S&P ASX 200 slipped 0.84% 

· Hong Kong’s Hang Seng index rose 0.47%

· China’s CSI300 added 0.66%

· The MSCI Asia Pacific index was steady

Stock of the day

Ganfeng Lithiuim shares rose as much as 12.9% after a 1.47-billion-yuan ($226-million) deal to buy Yili Hongda. The deal mainly is to increase Ganfeng Lithium’s market share in the field of lithium products and enhance its core competitiveness, in line with the current upstream and downstream integration and new energy vehicle industry development strategy.

Asia markets US bonds Key auction US stimulus looms China PPI Producers price index