ATF: Hong Kong: Investors piled into risk assets as benign US CPI data calmed inflation jitters with Hong Kong outperforming as 12 Chinese Internet platform companies pledged to avoid anti-competitive behaviour and signalled compliance with antitrust laws.
Chinese tech giants including Baidu, JD.com, and Bytedance have made promises to stop using such banned practices, including over-harvesting consumer data, abusing their market dominance position.
They also pledged to avoid anti-competitive behaviour such as forcing vendors to use their platform exclusively, according to a statement from the State Administration for Market Regulation.
Australia’s S&P ASX 200 advanced 0.66%, Hong Kong’s Hang Seng index jumped 1.42% and China’s CSI300 added 0.83% but Japan’s Nikkei 225 index eased 0.44% after Japanese machinery orders unexpectedly contracted 7.1% YoY, compared to the baseline forecast of a 2.3% expansion. Regionally, the MSCI Asia Pacific index rose 0.28%.
Tokyo concern
Analysts are worried the Covid-19 “state of emergency” declaration in the Tokyo region since early January through the end of March has had a larger-than-expected impact.
“The sharp fall in machinery orders in February poses downside risks to our view that business investment continued to rise last quarter,” said Tom Learmouth, Japan Economist at Capital Economics.
“Indeed, the risks to our forecast for a 0.8% q-o-q rise in non-residential investment last quarter are firmly to the downside.”
US Treasuries eased after a massive rally overnight, which saw the 10-year yield falling 8 basis points as US consumer prices data showed that while underlying inflation picked up in March, it was not wildly rising as feared. They ticked up 2 basis points to 1.64% on Wednesday.
“Inflation rose as the re-opening of the economy led to higher airfares and hotel accommodation costs,” said Mansoor Mohi-uddin, Chief Economist at Bank of Singapore.
“The Fed is set to look through any temporary rise in inflation above its 2% goal this year and keep interest rates unchanged in 2021 to the benefit of risk assets. We expect the central bank will not start raising interest rates until as late as 2024.”
Gold gains
Gold made a recovery after the previous day’s hammering rising 0.8% to $1,746 but there is caution in the air as the absence of strong investment demand, has put the burden on the physical gold market, like bars and coins as well as jewelery, to mop up excess supply.
“First and foremost, expectations for real interest rates in the US-the most important driver of gold’s performance in recent years- have likely bottomed and should move higher. Moreover, this headwind to the yellow metal is unlikely to abate any time soon, particularly with growth in the US economy expected to accelerate,” said UBS analysts Dominic Schnider, Luca Henzen, and Wayne Gordon in a note.
“In this process, we expect prices to slide further into 2022.”
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Asia Stocks
- Japan’s Nikkei 225 index eased 0.44%
- Australia’s S&P ASX 200 advanced 0.66%
- Hong Kong’s Hang Seng index jumped 1.42%
- China’s CSI300 added 0.83%
- The MSCI Asia Pacific index rose 0.28%.
Stock of the day
Hong Kong technology stocks surged after the State Administration for Market Regulation said these companies had pledged to stop abusing their market dominance position, signalling a truce between the two sides. Baidu rose 3.7% and JD.com jumped 3.2%.
