Asia’s major stock indexes crept ahead on Wednesday with investor mood lifted by fresh data out of China, though gains across the region were capped by fears over fading hopes on central banks easing any time soon.
Benchmark US Treasury yields were near multi-year highs, as traders worried about the impact of higher-for-longer interest rates.
The dollar index hit a fresh 10-month high, while the Japanese yen came closer to a key level where Japanese officials are seen as potentially intervening to shore up the currency.
That weaker yen, though, along with some bargain buying, saw Japan’s Nikkei share average rebound from a one-month low.
The Nikkei closed 0.18% higher at 32,371.90 after falling to 31,960.32, its lowest level since August 28. The broader Topix rose 0.32% to 2,379.53.
Chip-testing equipment maker Advantest gave up early losses to end 1.74% higher, becoming the biggest boost to the Nikkei.
China stocks edged up too, after data showed declines in industrial profits were easing on the back of policy support, with the central bank’s vow to bolster the recovery also helping sentiment.
Profits at China’s industrial firms fell 11.7% year-on-year for the first eight months, narrowing from a 15.5% contraction for the first seven months, potentially suggesting a modest recovery is beginning to take root for some businesses.
Meanwhile, China’s central bank said it would step up policy adjustments and implement monetary policy in a “precise and forceful” manner to support an economy whose recovery was improving with “increasing momentum”.
The Shanghai Composite Index rose 0.16%, or 5.04 points, to 3,107.32, while the Shenzhen Composite Index on China’s second exchange advanced 0.39%, or 7.30 points, to 1,901.98.
Hong Kong-listed tech giants advanced 0.6% and the benchmark Hang Seng Index gained 0.83%, or 144.97 points, to 17,611.87. The Hang Seng China Enterprises Index climbed 0.65%.
But there was more bad news for ailing real estate giant China Evergrande Group, whose outlook darkened significantly this week with news of a hitch in a debt restructuring and a bond default by its domestic unit. Shares in the firm plummeted 18.99%.
Elsewhere across the region, in earlier trade, Mumbai, Manila and Jakarta were also up, but Sydney, Seoul, Singapore, Wellington and Taipei were in the red. MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed in afternoon trade.
Dow’s Biggest One-Day Drop Since March
In early European trade, pan-region Euro Stoxx 50 futures edged up 0.05% while German DAX futures were down 0.07% and FTSE futures were down 0.14%.
On Tuesday, the Dow posted its biggest one-day percentage drop since March, while all three major averages ended at their lowest closing levels in well over three months.
Risk sentiment has been hit after the Federal Reserve indicated it would keep rates higher for longer than investors had previously expected.
In currencies, the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up at 106.24 – after climbing as high as 106.32, its highest since November 30.
The Japanese yen remained weak versus the greenback at 149 per dollar. The dollar’s strength against the yen in particular has kept traders on alert for an intervention to prop up the Japanese currency, especially after Finance Minister Shunichi Suzuki said no options were off the table.
The 150 yen per dollar level is seen by financial markets as a red line that would spur Japanese authorities to act, as they did last year.
In treasuries, benchmark 10-year yields have climbed to 16-year highs in the wake of the Federal Reserve’s hawkish longer-term rate outlook last week. The yield reached 4.5255%, compared with its US close of 4.558% on Tuesday.
The two-year yield, which rises with traders’ expectations of higher Fed fund rates, touched 5.0623% compared with a US close of 5.077%.
US crude ticked 1.05% higher to $91.34 a barrel. Brent crude rose to $94.89 per barrel.
Tokyo – Nikkei 225 > UP 0.18% at 32,371.90 (close)
Hong Kong – Hang Seng Index > UP 0.83% at 17,611.87 (close)
Shanghai – Composite > UP 0.16% at 3,107.32 (close)
London – FTSE 100 > UP 0,10% at 7,633.41 (0933 BST)
New York – Dow < DOWN 1.14% at 33,618.88 (Tuesday close)
- Reuters with additional editing by Sean O’Meara