Stocks in Asia mixed as Chinese measures weigh in: Markets soar

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(Bloomberg) – Stocks in Asia were mixed on Tuesday, with investors weighing Chinese measures to support the economy and the prospect of faster policy tightening from the Federal Reserve to fight inflation.

Stocks were higher in Japan and South Korea, while Hong Kong fell and China faltered as investors weighed measures to combat headwinds in the economy from Covid-led lockdowns. U.S. futures gained after stocks ended little change in thin trading on Monday.

Yields on Treasuries fell after the long end fell on Monday. St. Louis Fed President James Bullard said rate hikes of 75 basis points – while not the base case – should not be ruled out as the central bank needs to act quickly to fight against inflation. Australian bond yields jumped.

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The dollar held an advance. The yen is in the midst of the longest losing streak in at least half a century. Oil gave back some of its gains overnight.

Treasury yields are around the highest in more than three years as investors wonder if inflation has peaked. A spike in energy costs highlighted price concerns as U.S. natural gas prices hit their highest intraday level in more than 13 years.

Disruptions to supply chains from China’s lockdowns and war-induced commodity flows are keeping upward pressure on prices at a time when global growth is expected to slow. The World Bank cut its forecast for global economic expansion this year following Russia’s invasion of Ukraine.

“Spikes in yield have often caused problems for equities, but we believe the past is an imperfect guide in a world shaped by supply shocks,” BlackRock Investment Institute strategists led by Wei said in a note. Li, Global Chief Investment Strategist. “We see central banks normalizing quickly – but without dampening the economy. This should keep real yields low and support equity valuations.

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In China, markets are also awaiting the release of prime lending rates on Wednesday after the People’s Bank of China cut the reserve requirement ratio for most banks on Friday but refrained from cutting interest rates.

“The reluctance to ease monetary policy any further before Covid is under control means that market sentiment is likely to remain gloomy in the coming weeks,” the Gavekal Dragonomics team wrote in a note on Monday. “However, equities will rally even more if lockdowns are lifted and policymakers begin to offset the loss of growth with additional easing measures.”

Meanwhile, Ukrainian President Volodymyr Zelenskiy said on Monday that Russian forces have begun the campaign to conquer the Donbass region in eastern Ukraine as Moscow continues to move troops and equipment to that part of the country. .

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Will value stocks finally outperform their growth counterparts? What will be the best performing emerging stock market for the rest of 2022? “Rotations” is the theme of this week’s MLIV Pulse survey. Participation takes one minute and is anonymous, so please click here to get involved.

What to watch this week:

Earnings include American Express, China Telecom, IBM, Johnson & Johnson, Netflix, TeslaChicago Fed President Charles Evans to speak, Tuesday’s EIA Crude Oil Inventories Report, Prime Lending Rates Wednesday in China, Wednesday’s Federal Reserve Beige Book, Wednesday’s French presidential election debate, San Francisco Fed Chair Mary Daly, Chicago Fed Chair Charles Evans must take the floor Wednesday Eurozone CPI, US Initial Jobless Claims, Thursday Fed Chairman Jerome Powell, ECB President Christine Lagarde discuss the global economy at an IMF event, Thursday PMI manufacturers: Eurozone, France, Germany, UK, Friday Bank of England’s Andrew Bailey will speak, Friday

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Some of the major movements in the markets:

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S&P 500 futures rose 0.3% at 10:38 a.m. in Tokyo. The S&P 500 was little changed Nasdaq 100 futures gained 0.5%. The Nasdaq 100 rose 0.1% The Topix index rose 0.6% The Australian S&P/ASX 200 index rose 0.7% The Kospi index gained 1.1% The Hang index Seng fell 2.2% The Shanghai Composite Index rose 0.2%

Currencies

The Japanese yen was at 127.08 to the dollar The offshore yuan was at 6.3787 to the dollar The Bloomberg Dollar Spot Index was little changed The euro was trading at $1.0784

Obligations

The yield on 10-year Treasury bills fell one basis point to 2.84% The yield on Australian 10-year bonds rose nine basis points to 3.06%

Merchandise

West Texas Intermediate crude fell 0.5% to $107.70 a barrel Gold was at $1,976.31 an ounce

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