Asia-Pacific Shares Tumble on Resurgent Worries Over Rising US Bond Yields

The major Asia-Pacific stock indexes finish lower across the board on Thursday, led by a steep drop in technology shares, fueled by a similar move on Wall Street on Wednesday. The catalyst behind both moves was a rise in bond yields.

During the U.S. session, the 10-year Treasury yield ticked up to 1.47%, pressuring areas of the market with high valuations. It was still off last week’s peak of above 1.61% that roiled stock markets as investors bet on rising inflation.

Rising interest rates disproportionately hurt high-growth companies in both the U.S. and Asia because investors value them based on earnings expected years into the future, and high interest rates hurt the value of futures earnings more than the value of earnings made in the short-term.

In the cash market on Thursday, Japan’s Nikkei 225 Index settled at 28930.11, down 628.99 or -2.13%. Hong Kong’s Hang Seng Index finished at 29236.79, down 643.63 or -2.15% and South Korea’s KOSPI Index closed at 3043.49, down 39.50 or -1.28%.

In China, the Shanghai Index settled at 3503.49, down 73.41 or -2.06% and in Australia, the S&P/ASX 200 Index finished at 6760.70, down 57.30 or -0.84%.

Global Selling Trips Australian Shares

Australian shares fell on Thursday as renewed worries about rising U.S. bond yields soured risk sentiment globally.

The S&P/ASX 200 Index was also weighed down by miners Rio Tinto and BHP Group and supermarket chain Woolworths Group as they traded ex-dividend.

Tech stocks fell 1.5%, tracking a sell-off in U.S. peers. Buy-now-pay-later firm Afterpay slid more than 2%, while Xero Ltd shed 3%.

In economic news, Australia’s January retail sales increased 0.5% month on month on a seasonally adjusted basis, according to data published Thursday by the Bureau of Statistics. That compared against expectations for a 0.6% increase in a Reuters poll.

The country also recorded a trade surplus of 10.142 billion Australian Dollars (about $7.88 billion), higher than expectations in a Reuters poll for a 6.5 billion Australian Dollar trade surplus.

Hong Kong Stocks End Lower on Material, Tech Firms

Hong Kong shares dropped on Thursday, weighed down by losses in material and tech stocks, as equities globally retreated on renewed doubts over monetary support after another rise in U.S. Treasury yields. The sub-index of the Hang Seng tracking tech shares dipped 5.8%, while the IT sector dropped 5.3%, and the material sector ended 6.4% lower.

Japan’s Nikkei Hits 1-Month Low as US Futures Slump

Japan’s Nikkei Index on Thursday dropped to its lowest in one month, as investors sold off heavyweights including SoftBank Group and Fast Retailing, tracking a slump in U.S. futures during the Asian trade.

SoftBank Group fell 5.19% in the wake of news that British supply chain finance firm Greensill Capital, which is backed by the Japanese conglomerate, was in talks to sell large parts of its business.

“There are uncertainties in the move of U.S. bond yields, which has made the market outlook unclear,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Markets Post Solid Gains; Aussie Shares Higher after GDP Rose 3.1%

The major Asia-Pacific stock indexes were sharply higher on Wednesday as a private survey showed slowing services sector activity in China last month. Investors likely interpreted the news to mean the Chinese economy is not heating up as previously thought, thereby raising the possibility that current stimulus measures would be extended.

In the cash market on Wednesday, Japan’s Nikkei 225 Index settled at 29559.10, up 150.93 or +0.51%. Hong Kong’s Hang Seng Index is trading 29836.51, up 740.65 or +2.55% and South Korea’s KOSPI Index finished at 3082.99, up 39.12 or +1.29%.

China’s Shanghai Index settled at 3576.90, up 68.31 or +1.95% and Australia’s S&P/ASX 200 Index finished at 6818.00, up 55.70 or +0.82%.

China’s Services Sector Grows at Slowest Rate in 10 Months in February:  Caixin PMI

China’s services sector activity grew at its slowest pace in 10 months in February as firms struggled with sluggish demand and high costs, a private sector survey showed on Wednesday, prompting them to cut jobs.

The Caixin/Markit Services Purchasing Managers’ Index (PMI) fell to 51.5, the lowest since April, from 52.0 in January but remained above the 50-mark that separates growth from contraction on a monthly basis. Investors shrugged off the results from the report, expecting better numbers in the future.

“We expect manufacturing and services PMIs to recover in March, as the COVID-19 situation was quickly brought under control in recent weeks. Beijing may gradually relax some social distancing rules in coming months and some pent-up demand could be released,” Nomura wrote.

China Stocks Gain the Most in 3 Weeks on Growth Optimism

China stocks posted their biggest one-day gain in three weeks on Wednesday, led by banking and commodity shares, as hopes of domestic economic growth offset fears of tighter monetary policy. Some traders also attributed the market strength to bullishness ahead of the annual gathering of the National People’s Congress, which starts on Friday.

China’s top banking watchdog said on Tuesday regulators were studying effective measures to reduce the risk of foreign capital inflows. The remark is interpreted by some as pointing to Beijing’s little willingness to lift interest rates, a move that could invite more inflows.

Larry Hu, an economist at Macquarie Capital Ltd, said that there’s no need to worry about inflation in China. For 2021, we expect China to see reinflation, but not high inflation,” Hu wrote. “The reinflation trend is great news to COVID losers such as financials and industrial companies.”

Australia Shares Climb as Strong GDP Growth Cements Recovery Hopes

Australian shares climbed on Wednesday after a much faster-than-expected economic growth in the final quarter of 2020 cemented hopes of a stronger recovery this year. Data showed the economy accelerated 3.1% in the December quarter, higher than forecasts for a 2.5% rise.

A very low community transmission of COVID-19, coupled with massive and timely fiscal and monetary stimulus, has led to a strong rebound in the economy.

“The big picture is that while the initial recovery through the first half of 2021 may still be subject to air-pockets and jobs vulnerabilities linger…Australia is unambiguously on a surer path to sustained recovery,” Mizuho analysts said in a note.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Indexes: Post Weekly Losses as Global Bond Yield Surge Wreaks Havoc

The major Asia-Pacific stock indexes finished lower last week as investors followed Wall Street lower with a selling spree driven by a U.S. Treasury bond yield surge.

Hong Kong stocks posted their worst week in a year, while worries about central bank tightening and new corporate regulations pressured Chinese shares. Foreigners were net sellers of Japanese stocks on the yields rise, but the Bank of Japan took advantage of the stock market rout with an ETF buy for the first time this month.

South Korean shares posted their worst weekly performance in nearly 2-1/2 years as the bond yields surge crushed demand for technology stocks. Australian shares also tumbled on firmer bond yields and a plunge in technology and miners shares.

Cash Market Performance

In the cash market last week, Japan’s Nikkei 225 Index settled at 28966.01, down 1051.91 or -3.50%. South Korea’s KOSPI Index finished at 3012.95, down 94.67 or -3.05% and Hong Kong’s Hang Seng Index closed at 28980.21, down 1664.52 or -5.43%.

In China, the Shanghai Index settled at 3509.08, down 187.19 or -5.06% and in Australia, the S&P/ASX 200 Index finished at 6673.30, down 120.50 or -1.77%.

Hong Kong Stocks Post Worst Week in One Year as Bond Yields Surge

Hong Kong stocks ended sharply lower last week, in line with broader markets, posting their worst week in one year, as a rout in global bonds sent yields flying and dampened appetite for risky assets.

For the week, HSI tumbled 5.4%, while HSCE slumped 7.1%, both logging their steepest drops since the week to March 13, 2020.

Earlier in the week, Hong Kong shares posted their worst daily performance in more than nine months on Wednesday after the city announced a hike in stamp duty on stock trading, prompting huge outflows of mainland cash.

China Shares Slump Most in Seven Months as Tightening Fears Mount

Chinese shares closed lower last week, with the benchmark stock index witnessing its biggest daily drop in seven months, as investors worried about high valuations amid growing concerns of tightening in policies.

China’s benchmark index lost ground over policy-tightening worries, after advancing to a more than 13-year high in February on optimism around the country’s economic recovery. That is despite indications that while the central bank will scale back support for the economy in 2021 and cool credit growth, fears of debt defaults and a derailed recovery will prevent it from tightening any time soon.

Nikkei Drops to Near 3-week Low as Spike in Bond Yields Spooks Investors

Japanese shares slumped last week, while logging their biggest daily decline in nearly a year, after a spike in global bond yields spooked investors already uneasy about the market’s stretched valuation.

Helping to possibly curb the selling pressure, the Bank of Japan bought exchange-traded funds (ETFs) on Friday for the first time this month as Tokyo stock prices slumped, data showed, in a sign the central bank is becoming more flexible with its asset purchases.

The BOJ bought 5 million yen ($47,068) worth of ETFs on Friday, central bank data showed. Some analysts saw the BOJ’s moves in February as a prelude to what may come out of a March review of its policy tools to make its asset-buying program more nimble.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Plummet as Higher Global Bond Yields Spook Investors; Japan’s Nikkei Loses Nearly 4%

The major Asia-Pacific stock indexes dropped sharply and regional bond yields rose on Friday after U.S. Treasury yields jumped, as prospects for higher inflation and economic growth increased, making investors doubt that central banks would retain ultra-low interest rates for a longer period.

Cash Market Performance

In the cash market on Friday, Japan’s Nikkei 225 Index settled at 28966.01, down 1202.26 or -3.99%. Hong Kong’s Hang Seng index finished at 28980.21, down 1093.96 or -3.64% and South Korea’s KOSPI Index closed at 3012.95, down 86.74 or -2.80%.

In China, the Shanghai Index settled at 3509.08, down 75.97 or -2.12%. In Australia, the S&P/ASX 200 Index finished at 6673.30, down 160.70 or -2.35%.

Tracking Global Bond Yields

Investors continued to track bond yields during Friday’s session. Overnight, the yield on the benchmark 10-year U.S. Treasury note briefly crossed the 1.6% level to trade at its highest level in more than a year.

U.S. bond yields eased in the afternoon of Asia trading hours on Friday. The yield on the 10-year was last at 1.4719%, while the yield on the 30-year Treasury bond sat at 2.2636%.

In Asia-Pacific, the yield on the Australian 10-year bond slipped to 1.834% after touching a high of 1.973% earlier. The 10-year Japanese government bond’s yield also declined to 0.156%. Earlier, the yield on the 10-year JGB had risen as high as 0.181% – a level not seen since early 2016, according to FactSet.

Japan Stocks Crumble as Bond Market Rout Wreaks Havoc

Japanese shares slumped on Friday, logging their biggest daily decline in nearly a year, after a spike in global bond yields spooked investors already uneasy about the market’s stretched valuation.

All of the Tokyo Stock Exchange’s 33 industry subindexes were in the red, with electronic machinery makers, pharmaceuticals and real estate companies falling more than 3%.

Semiconductor-related shares, one of the main leaders of the market’s rally to 30-year highs, succumbed to heavy selling, after U.S. chip shares fell 5.8%.

South Korean Shares Post Worst Weekly Fall in 1-Month on Foreign Selloff, US Tech, Bond Rout

South Korean shares reversed most gains clocked in the previous session on Friday, dragged down by a record foreign selloff, following a sharp overnight fall in Wall Street tech shares and a spike in Treasury bond yields.

For the week, it tumbled 3.05%, its sharpest decline in four weeks, while it gained 1.23% on a monthly basis, extending gains to a fourth straight month.

China, Hong Kong Stocks Drop Over 2% as Bond Yields Surge

China and Hong Kong stocks fell sharply on Friday, in line with broader markets, as a rout in global bonds sent yields flying and dampened appetite for risky assets.

Fears over policy tightening and lofty valuations had already pummeled China’s benchmark CSI300 index, which was down nearly 10% from its record high hit earlier in the month, mainly due to heavy selling in high-flying sectors such as consumer, healthcare and new energy firms.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Up Across the Board after Fed Chair Powell’s Reaffirmation of Low Interest Rates

The major Asia-Pacific stock indexes were up across the board on Thursday as investors followed the lead set by the strong performance on Wall Street the previous session.  Shares in South Korea posted the biggest gain.

The bullish tone was set by the moves on Wall Street as U.S. Federal Reserve Chair Jerome Powell continued to downplay the threat of inflation, saying it could take three years to reach the central bank’s target consistently.

In the cash market on Thursday, Japan’s Nikkei 225 Index settled at 30168.27, up 496.57 or 1.67%. Hong Kong’s Hang Seng Index finished at 30074.17, up 355.93 or +1.20% and South Korea’s KOSPI Index closed at 3099.69, up 104.71 or +3.50%.

In China, the Shanghai Index settled at 3585.05, up 20.97 or +0.59%. Australia’s S&P/ASX 200 Index finished at 6834.00, up 56.20 or +0.83%.

In Wednesday’s testimony in front of the House Financial Services Committee, Powell said inflation could be volatile as the economy reopens and there’s increased demand. Still, the Fed chair does not expect inflation to run hot and said the central bank has tools to combat it if it should.

South Korea Shares End Firmer as Fed’s Powell Soothes Inflation Fears

South Korean shares posted on Thursday their best day in almost two months, driven by chip heavyweights and foreign buying, after U.S. Federal Reserve Chair Jerome Powell’s reaffirmation to keep interest rates low boosted risk appetite globally.

Chip giants Samsung Electronics and SK Hynix rose 4.02% and 9.19%, respectively, while Naver and LG Chem added 2.41% and 3.49%.

In other news, the Bank of Korea said it was in no rush to remove monetary stimulus even with inflationary expectations on the rise, as the pandemic continues to cloud economic outlook.

Hong Kong Stocks Rebound as Investors Look Past Proposed Stamp Duty Hike

Hong Kong shares bounced on Thursday after posting their worst session in over nine months a day earlier, as investors largely looked past Hong Kong’s move to raise stamp duty on stock trading.

The hike could create some short-term negative impact on stock trading, Yang Lingxiu, chief strategist at Citic Securities, said. Economic recovery and listings of new-economy companies and some U.S.-listed Chinese firms’ secondary listing, however, would continue to attract fund inflows into Hong Kong, he added.

Hong Kong brokerages could have to absorb the government’s planned increase in stock trading stamp duty or reduce their already wafer-thin commissions, according to brokers, amid concerns the higher levy will reverse a retail buying craze.

China Shares End Higher on Gains in Property Firms

China shares rebounded on Thursday, as strong gains in the property sector helped the market recover from sharp losses made a day earlier.

Property shares were among the top gainers after some research notes by local brokerages said the valuation of the real estate sector was at a historically low level. A gauge that tracks the sector jumped 8.17%.

Separately, sentiment was slightly supported by Chinese President Xi Jinping celebrating “complete victory” in the effort to eradicate rural poverty at a ceremony in Beijing on Thursday to mark a signature initiative of his eight-year tenure.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Expected to Open Higher after Fed’s Powell Eases Fears of Policy Shift

If the price action in the U.S. is any indication, Asia-Pacific stock index traders should expect volatility and a bias to the upside on the opening. Late in the session on Tuesday, all three major U.S. stock index futures are trading high after recovering from early session weakness.

U.S. shares bounced off their lows after Federal Reserve Chair Jerome Powell said in his testimony to Congress that inflation is still “soft” and the economic outlook is still “highly uncertain,” easing fears of a policy change by the central bank.

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved, the Fed chief said in prepared remarks for the Senate Banking Committee.

Tuesday’s Asia-Pacific Recap

Shares in the Asia-Pacific region finished mixed on Tuesday, as investors monitored the sell-off in regional technology stocks after their counterparts tanked on Wall Street overnight.

In the cash market on Tuesday, Hong Kong’s Hang Seng Index settled at 30632.64, up 312.81 or +1.03% and South Korea’s KOSPI Index finished at 3070.09, down 9.66 or -0.31%. Japan was closed for a holiday.

In Australia, the S&P/ASX 200 Index settled at 6839.20 and China’s Shanghai Index closed at 3636.36, down 6.09 or -0.17%.

Hong Kong Stocks End Higher on Gains in Financials, Energy Firms

Hong Kong stocks closed higher on Tuesday, helped by gains in financial and energy firms on hopes of a faster economic recovery globally.

The Hang Seng Financials Index climbed 2.1% to lead the gains. The index is up 12.3% so far this year. The Hang Seng Energy Index advanced 2.6% as oil prices jumped.

Galaxy Entertainment Group surged as much as 12% to a record high of HK$78.20, the top mover among Macau’s gaming stocks that advanced on reports of a strong rebound in gaming revenue during the Chinese New Year.

Investors have started to wonder if some stocks were overvalued, leading to a correction in consumer and new economy stocks that had been favored by investors, Guodu Hong Kong noted in a report.

China Stocks End Lower, Losses Limited by Gains in Financials

China stocks closed lower in volatile trading on Tuesday, after a sharp correction the previous session, as worries over policy tightening weighed on sectors with lofty valuations, although losses were limited by gains in financial shares.

South Korean Shares End Lower Amid Rising Yields, Inflation Worries

South Korean shares closed lower on Tuesday, marking a negative finish for a fourth session in five, as the appeal of equities was dented amid higher bond yields and inflation outlook.

In other news, the Korean central bank chief said he will consider stepping up government bond purchases if an increase in issuance adds to volatility in yields, but stopped short of offering a concrete plan.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Led Lower by China Weakness, Rising Rate Fears

The major Asia-Pacific stock indexes finished mixed but mostly lower on Monday amid rate fears. Meanwhile, China left its benchmark lending rate unchanged over the weekend. Mainland Chinese stocks led losses among the region’s major markets as they closed lower, but Japan bucked the trend to finish higher.

In the cash market on Monday, Japan’s Nikkei 225 Index settled at 30156.03, up 138.11 or +0.46%. Hong Kong’s Hang Seng Index finished at 30319.83, down 324.90 or -1.06% and South Korea’s KOSPI Index closed at 3079.75, down 27.87 or -0.90%.

In China, the Shanghai Index settled at 3642.44, down 53.72 or -1.45% and in Australia, the S&P/ASX 200 finished at 6780.90, down 12.90 or -0.19%.

China Blue-Chips Slump Most in Nearly 7 Months on Valuation, Policy Tightening Concerns

China’s blue-chip index posted its biggest daily drop in nearly seven months on Monday after touching record highs last week, as investors fretted over high stock valuations and the risk of policy tightening.

China left its benchmark lending rate for corporate and household loans unchanged for a 10th straight month on Saturday, but speculation has been rising that authorities may begin to adopt a tighter policy stance.

Monetary conditions have tightened in practice since the start of the year. We expect the PBOC to formalize the shift with policy rate increases in the next few months,” said analysts at Capital Economics.

The consumer staples sector slumped 5.96%, the healthcare sub-index dropped 5.15% and the financial sector sub-index shed 1.75%.

South Korea Shares Fall on US Yield Spike, China Policy Tightening Woes

South Korean shares ended lower on Monday, reversing early gains, as strong local exports data were offset by a spike in U.S. Treasury yields and concerns about policy tightening in China. The won weakened, while the benchmark bond yield rose.

Most heavyweights slid, with chip giant Samsung Electronics down 0.48%, while internet giant Naver and LG Chem tumbled 2.89% and 2.66%, respectively. Samsung’s peer SK Hynix, however, rose 2.63%.

U.S. 10-year Treasury yields spiked on expectations that massive government stimulus would lead to higher growth and inflation, while there are mounting speculation that the Chinese authorities may begin to adopt a tighter policy stance.

The Bank of Korea is expected to keep interest rates at a record low on Thursday, as a sluggish labor market keeps policymakers under pressure.

Japanese Shares Jump as Recovery Hopes Lift Cheap Cyclical Stocks

Japanese shares jumped on Monday, snapping a three-day losing streak, as optimism on economic recovery from the pandemic prompted fresh buying in materials, travel-related and other cheap cyclical stocks.

Investors scooped up cyclical shares with cheap valuation including Yokohama Rubber and Sumitomo Metal, which gained 8.9% and 7.2%, respectively.

Travel-related shares also advanced as investors bet on a continued recovery in the global economy with COVID-19 vaccination programs gathering pace across the world.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares to Open Flat as Investors Eye Rising Global Yields, Volatile Crude Oil Prices

The major Asia-Pacific stock indexes are expected to open Monday’s session flat with the early price action a response to the mixed performance on Wall Street and the plunge in crude oil prices. Concerns over a weakening U.S. labor market will be another price driver as well as global vaccination progress. Traders will also be watching for a rotation out of high-flying technical stocks into cyclical shares.

In the cash market on Friday, Japan’s Nikkei 225 Index settled at 30017.92, down 218.17 or -0.72%. In Hong Kong, the Hang Seng Index finished at 30644.73, up 49.46 or +0.16% and in South Korea, the KOSPI Index closed at 3107.62,

In China, the Shanghai Index settled at 3696.17, up 20.81 or +0.57% and in Australia, the S&P/ASX 200 finished at 6793.80.

Traders will be watching global oil prices early Monday after oil prices fell for a second session on Friday, retreating further from recent highs, as Texas energy companies began preparations to restart oil and gas fields shuttered by freezing weather and power outages. Rising global bond yields will also be eyed by investors as a reason to trim aggressively long positions.

Last Week’s Recap

Hong Kong Stocks Post Third Weekly Gain on Economic Recovery Bets

Hong Kong shares ended higher on Friday to deliver the third weekly gain, underpinned by material stocks, as investors cheered data from major economies pointing to a global economic recovery from the COVID-19 pandemic fallout.

Leading the gains on Friday, the Hang Seng Materials Index climbed 3.1%, having climbed 15.5% in its best week since April 2015. Telecommunications firms also advanced with an 11% jump for the week.

China’s Blue-Chip Index Ends Week Lower on Policy Tightening Worries

China’s blue-chip index recouped earlier losses to end higher on Friday, helped by gains in infrastructure and securities stocks, though it posted weekly losses on investor concerns over policy tightening and lofty valuations.

Leading the gains for the day, the CSI300 Infrastructure Index jumped 2.9%, while the CSI SWS Securities Index climbed 2.7%. Among sectors with high valuations, the CSI 300 Consumer Staples Index retreated 2.6%, snapping a four-week gain, while the CSI300 Healthcare Index slumped 4.3%.

The big fear for investors is that the People’s Bank of China (PBOC) would start to drain liquidity sooner than the U.S. Fed, while there are already expectations of a rise in the domestic interest rate. Jin Jing, an analyst with Caitong Securities warned, “Investors could start to rebalance their allocations, shifting out of expensive stocks towards cyclical players with low valuations that would benefit from an economic recovery.”

Australia Shares Track Asian Peers Lower, Commodity Stocks Weigh

Australian shares has their worst session in three weeks on Friday, tracking losses in Asian peers, as a worse-than-expected rise in weekly U.S. jobless claims tempered hopes for a quick economic recovery.

Energy stocks saw their worst session in 4-1/2 months, slumping 3.6% as oil prices dropped. Minters had their worst day in three weeks as gold prices sank to a seven-month low as rising U.S. Treasury yields eroded the bullion’s appeal as an investment.

Nikkei Slips on Profit-Taking, Logs Weekly Gain

Japan’s Nikkei share average slipped on Friday as profit-taking ahead of the weekend trumped optimism over a broad economic recovery, though the index gains for a third week.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Finish Mixed as Investors Eye Rise in Treasury Yields

The major Asia-Pacific stock indexes finished mixed on Wednesday as investors reacted to the rise in U.S. Treasury yields that derailed the U.S. stock market rally the previous session. The market reopened in Hong Kong after a long holiday, but markets in mainland China remained closed on Wednesday for the Lunar New Year holidays.

Cash Market Performance

In Japan, the Nikkei 225 Index settled at 30292.19, down 175.56 or -0.58%. Hong Kong’s Hang Seng Index finished at 31084.94, up 338.28 or +1.10% and South Korea’s KOSPI Index closed at 3133.73, down 29.52 or -0.93%. Australia’s S&P/ASX 200 Index settled at 6885.20, down 32.10 or -0.46%.

US Stocks Pressured by Treasury Yield Jump

Overnight on Wall Street the benchmark S&P 500 Index settled lower as the benchmark 10-year Treasury yield jumped 9 basis points to top 1.3% – a level not seen since February 2020. The 30-year rate also hit its highest level in a year. The yield on the 10-year Treasury last stood at 1.2989%.

Hong Kong Stocks End Higher Ahead of China Markets Reopening

Hong Kong stocks ended higher on Wednesday, marking the seventh straight session of gains and extending a bull run ahead of the reopening of mainland markets after the Lunar New Year break, with sentiment lifted by optimism over global economic recovery.

The Hang Seng Index rose 1.10%, reaching its highest close since June 2018, while the China Enterprises Index increased 1.60%. The Hang Seng Tech Index surged 2.34% and the Hang-Seng sub-index tracking information technology firms climbed 1.88%.

An improving pandemic situation and expectations the bull run will continue when China markets reopen helped lift investor sentiment.

Japan Shares Slip from 30-year High on Profit Taking, Pandemic-Hit Stocks Rise

Japanese shares fell on Wednesday as investors booked profits after a recent rally drove them to a 30-year high, even as pandemic-beaten shares gained on expectations for an economic recovery from a coronavirus-driven slump. The declines followed a drop overnight in U.S. technology stocks.

“Investors are selling stocks for profit booking today. The market is taking a pause from a rising momentum,” said” Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.

“Shares that were beaten down amid the pandemic are being bought as rising interest rates in the U.S. and Japan indicates an economic recovery. Rollouts of COVID-19 vaccines in Japan is another positive factor.”

South Korea Shares Snap Three-Session Winning Streak as Virus Cases Jump, U.S. Yields Rise

South Korean shares fell on Wednesday, after gaining for three consecutive sessions, as investor sentiment sapped on concerns over rising coronavirus cases at home and following a surge in U.S. Treasury yields on worries that a stimulus-fueled global recovery will stoke inflation.

Among major heavyweights, chip giants Samsung Electronics and SK Hynix dropped 2% and 1.9%, respectively, while LG Chem and Hyundai Motor slipped 2.2% and 1.6% each.

In other news, South Korea’s Prime Minister, Chung Sye-kyun, warned against the loosening enforcement of social-distancing rules after the country reported 621 new infections as of Tuesday midnight, the highest levels in 39 days.

For a look at all of today’s economic events, check out our economic calendar.

BHP Shares Gain on Strong Profit and Record Dividend; Target Price GBX 2,560

BHP Group, one of the largest diversified natural resource companies in the world, delivered a strong profit in the first half of the 2021 financial year and declared record half-year dividend of $1.01 per share and ROCE up to 24%, helping its shares soar over 5% on Monday.

The Anglo-Australian multinational mining, metals and petroleum dual-listed public company said its profit from operations rose 17% to $9.8 billion, up. Attributable profit came in at $3.9 billion, which included an exceptional loss of $2.2 billion predominantly related to the impairments of New South Wales Energy Coal and associated deferred tax assets, and Cerrejón.

The world’s largest listed miner said its underlying attributable profit rose 16% to $6.0 billion.

The London-listed BHP‘s shares, which surged over 8% in 2020, had risen about 16% so far this year. The stock closed 5.22% higher at GBX 2,228 on Monday.

“Our analysis shows that the fair value estimate for BHP is between a bear case of GBX 1,200 per share and a bull case of GBX 2,950 per share, leading to our high fair value uncertainty rating,” said Mathew Hodge, director at Morningstar.

“The bulk of our BHP Billiton fair value estimate derives from just three commodities: iron ore, copper, and petroleum, in broadly equal contributions of approximately one third apiece. Coking coal is a minor contributor.  As commodity prices tend to move in unison, our valuation scenario uses high, low, and baseline prices. We don’t split individual commodities out.  Our price scenarios also factor in currency, operating, and capital cost adjustments.”

The dual-listed company forecasts to make an investment decision soon on its $5.3-$5.7 billion Jansen potash project in Canada and the Scarborough natural gas project off Western Australia, in which BHP will invest $1.4-1.9 billion, Reuters reported.

BHP Stock Price Forecast

Fourteen analysts who offered stock ratings for BHP in the last three months forecast the average price in 12 months of GBX 2,146.43 with a high forecast of GBX 2,560 and a low forecast of GBX 1,610.

The average price target represents a -3.66% decrease from the last price of GBX 2,228. From those 14 analysts, seven rated “Buy”, six rated “Hold”, one rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of GBX1,950 with a high of GBX4,380 under a bull scenario and GBX680 under the worst-case scenario. The firm gave an “Overweight” rating on the natural resource company’s stock.

“We value BHP based on a simple average of our EV/EBITDA and P/NAV methodologies. This allows us to reflect both the shorter-term earnings power and longer-term value of the company. We apply an EV/EBITDA multiple of 6.7x, in line with its historical average. We apply a 1.0x multiple to our NPV estimate, which is based on a blended WACC of 9% and terminal growth rate of 2.0% from 2035,” said Alain Gabriel, equity analyst at Morgan Stanley.

Several other analysts have also upgraded the stock outlook. Citigroup raised the price target to GBX 2,100 from GBX 2,000. Berenberg initiated the coverage with hold rating and GBX 2,000 price target. Credit Suisse cuts to neutral from outperform; raises target price to GBX 2,100 from GBX 1,900.

In addition, UBS upped the target price to GBX 2,200 from GBX 2100. Independent Research increased the target price to GBX 2,100 from GBX 1,660 and rated hold. RBC cuts target price to GBX 2,500 from GBX 2,600. Liberum cuts price target to GBX 1,880 from GBX 2,400.

Analyst Comments

BHP declared a solid dividend of USc101/sh, exceeding our and cons. estimates of USc84-85/sh. Underlying EBITDA was in-line with cons. and within 1% of MSe but EPS missed by 2-5% on higher depreciation. Net Debt was broadly in-line and opex guidance was unchanged but is still based on favourable FX,” Morgan Stanley’s Gabriel added.

BHP‘s portfolio mix and quality stand out among peers. The low-cost position of its assets enables the company to generate FCF yield even in a stress scenario. It maintains a strong B/S, giving flexibility to pursue growth and/or increase cash shareholder returns, in particular given the company’s net debt target of US$12-17bn (post IFRS16 adjustment) vs FY20 levels of US$12.5bn. Spot FCF yields are comparable to peers, even without contributions from the Petroleum division, thus implying long-term optionality to a potential oil price recovery. We prefer BHP on a relative basis, given its attractive commodity mix ex-Iron Ore and free optionality on a potential oil price recovery.”

Upside and Downside Risks

Risks to Upside: Growth projects (Jansen potash, Escondida growth, Spence hypogene, Olympic Dam) successfully executed. Better operating performance, lower costs and capital expenditure. Higher commodity prices – highlighted by Morgan Stanley.

Risks to Downside: Execution issues at growth projects (Jansen potash, Escondida growth, Spence hypogene, Olympic Dam). Weak operating performance, higher costs and capital expenditure. Lower commodity prices.

Check out FX Empire’s earnings calendar

Asia-Pacific Shares: Nikkei 225 Index Hits Three-Decade High; Aussie Shares Follow Commodities Higher

The major Asia-Pacific stock indexes finished higher on Monday with Japan leading the charge as markets in China, Hong Kong and Taiwan remained closed for the Lunar holiday. In Japan, the benchmark Nikkei 225 surged past the 30,000 level for the first time in more than 30 years, according to data from Refinitiv. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.57%.

Cash Market Performance

In the cash market on Monday, South Korea’s KOSPI Index settled at 3147.00, up 46.42, up 1.50%. Australia’s S&P/ASX 200 Index finished at 6868.90, up 62.20 or +0.91% and in Japan, the Nikkei 225 Index closed at 30084.15, up 564.08 or 1.91%.

Japan’s Nikkei Closes Above 30,000 on Earnings Rebound, Economy Growth Hopes

Japanese shares surged on Monday to close at over a 30-year high on rising expectations for a rebound in corporate earnings and economic growth.

The benchmark Nikkei ended at 30,084.15, reclaiming the psychologically important 30,000 level for the first time since August 1990. Energy, healthcare, and industrial shares led the gains. The broader Topix rose 1.04% to 1,953.94 to close at its highest since June 1991.

Shares of companies that have reported positive earnings rose, as investors continued to bet on sectors expected to perform well as the global economy recovers from the coronavirus pandemic.

Japan is expected to start coronavirus vaccinations this week, which is also supporting stock prices. However, Japanese stocks have rallied 8% so far this month, and some analysts warn that the market may be overheating.

“Stocks have risen so fast you could say they’ve broken the speed limit,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank.

“Earnings growth has already been priced in for at least a year from now. There is reluctance to chase the upside from here, but stocks won’t fall too much.”

The stocks that gained the most among the top 30 core Topix names were Daiichi Sankyo Co Ltd up 3.6%, followed by Fanuc Corp, up 3.39%.

Australia Shares End Higher on Commodity Boost, Economic Rebound Bets

Australian shares ended firmer on Monday as a surge in commodity prices lifted mining and energy stocks, while corporate earnings and hopes of a global economic rebound in the wake of coronavirus vaccine rollouts also boosted sentiment.

Miners closed 1.91% higher, with copper prices at their peak in more than eight years. Global miner Rio Tinto Ltd gained 1.8% while rival BHP Ltd advanced 2.3%.

Energy shares also gained as oil prices hit their highest in more than a year amid fears of heightened tensions in the Middle East.

Electronics retailer JB Hi-Fi jumped to see its best day in a month after posting an 86% surge in first-half profit, driven by online sales, while Bendigo and Adelaide Bank Ltd gained 11.3% on logging a 67% climb in half-year profit.

Investors also kept an eye on fresh COVID-19 cases at home after Victoria went into a five-day lockdown last week following the emergence of a fresh COVID-19 cluster in Melbourne.

For a look at all of today’s economic events, check out our economic calendar.

Aussie Shares Stumble Ahead of Crucial Earnings Week; Nikkei’s Losses Limited by Chip Sector Surge

Shares in Australia and Japan closed lower on Friday on relatively low volume as many markets in the Asia-Pacific region were closed for the start of the Lunar New Year holiday.

In Australia, the benchmark S&P/ASX 200 Index dipped 0.63% to 6,806.70 with financials, energy and materials sub-indexes pressured throughout the session.

Japanese markets resumed trading after being closed Thursday for a public holiday. The benchmark Nikkei 225 Index declined 0.14% to 29,520.07 while the Topix Index climbed 0.16% to 1,933.88.

Friday’s session followed overnight moves on Wall Street where the Dow Jones Industrial Average ended near the flatline while the S&P 500 and NASDAQ Composite eked out gains.

Australia Shares Close Lower Weighed by Gold, Energy Stocks

Australian shares ended lower on Friday, hurt by losses in gold and energy stocks as prices of the underlying commodities declined, ahead of crucial earnings due next week.

“Participants are taking some exposure off the board ahead of the risk event that the earnings season will be,” said Nick Twidale, chief executive officer of APAC at FP Markets.

Earnings from Australian heavyweights, including BHP Group, Rio Tinto and National Australia Bank, are scheduled for next week.

Risk sentiment was also weighed by news that the country’s second-most populous city Melbourne will enter a five-day snap coronavirus lockdown after the discovery of a fresh cluster.

“Investors are closely watching Melbourne…there could be an acceleration in correction next week if the cases keep rising,” Twidale added.

Among sectors, energy stocks fell 1.3% as oil prices fell after OPEC cut its demand forecast and the International Energy Agency said the market was still over-supplied.

Oil & gas explorers Woodside Petroleum and Santos Ltd lost 1% and 1.6%, respectively.  Gold stocks fell 1.8%, snapping four-straight sessions of gains, as prices of the precious metal was weighed by a stronger dollar. Top independent gold producer Newcrest Mining was down 1%. Gold miners BHP Group and Rio Tinto fell 1.7% and 1.2%, weighing on the broader sector.

Nikkei Slips from Over 30-year High on Profit-Taking after Rally; Toyota, Chip Shares Jump

Japan’s stock benchmark snapped a four-session rally on Friday, slipping from a more than 30-year high hit in the previous session, as investors booked profits but gains in Toyota Motor and chip shares capped the losses.

Toyota Motor jumped 3.48%, after the automaker said on Wednesday after the markets closed that it has up to a four-month stockpile of chips and was not immediately expecting a global chip shortage to hit production. It raised its full-year earnings forecast by a bigger-than-expected 54%.

Chip-related shares gained after the Philadelphia Semiconductor Index hit record highs overnight, as Bloomberg News reported that U.S. President Joe Biden’s administration had pledged aggressive steps to address chip shortage.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Weekly Recap: Supported Across the Board by US Stimulus Hopes

The major Asia-Pacific stock indexes finished higher last week, tracking the performance of the Wall Street’s Big Three – S&P 500, Dow Jones Industrial Average and NASDAQ Composite. The primary catalyst behind the strength in the region were signs of progress in U.S. stimulus talks. Strong performances by a few local issues also contributed to the rally.

Weekly Cash Market Performance

In Japan, the Nikkei 225 Index settled at 28779.19, up 1115.80 or +4.03%. South Korea’s KOSPI Index finished at 3120.63, up 144.42 or +4.85% and Hong Kong’s Hang Seng Index closed at 29288.68, up 1004.97 or +3.55%.

In China, the benchmark Shanghai Index settled at 3496.33, up 13.26 or +0.38% and Australia’s S&P/ASX 200 Index finished at 6840.50, up 233.10 or +3.53%.

Common Theme Was US Stimulus Hopes

Asia-Pacific shares were supported across the board as Democrats pushed ahead with U.S. President Joe Biden’s proposed $1.9 trillion stimulus plan without bipartisan support.

Biden’s fellow Democrats in Congress approved a budget outline that will allow them to muscle the stimulus through in the coming weeks without Republican support.

Strengthening the case for a sizable relief package from the government to aid the recovery from the COVID-19 pandemic was the news that U.S. employment growth rebounded moderately in January and job losses in the prior month were deeper than initially thought.

Japanese Shares Boosted by Upbeat Earnings, US Stimulus Hopes

Japanese shares ended more than 4% higher last week, following the strength on Wall Street, driven by upbeat earnings from domestic firms and expectations of a large U.S. stimulus package.

On the earnings front, Japanese automakers jumped, with Mazda Motor surging 18.52% after cutting its loss forecast, making it the biggest gainer in the Nikkei index. Mitsubishi Motor jumped 8.13% and Nissan Motor gained 7.51%.

Hong Kong Shares Post Best Weekly Performance in Three Months

Hong Kong stocks posted their best weekly performance in three months, following persisting buying activity from mainland investors. The Hang Seng Index was mostly supported by consumer and industrial firms, as mainland investors continued to pour money into the Asian financial hub.

Mainland investors are buying stocks via the Stock Connect linking mainland and the Asian financial hub, extending the more than month-long buying spree. More mainland funds will be attracted to Hong Kong stocks whose valuations remain lower than those of A-share market, and U.S. and European markets.

Economic Recovery Hopes Underpin China Shares, Tensions with US Limit Gains

Liquidity issues were at the forefront last week, capping gains in China. China’s short-term money rates eased to two-week lows early last week, as signs of liquidity tension in the interbank money markets started to fade. But persistent tight liquidity conditions recently fueled speculation that the People’s Bank of China (PBOC) may be tightening policy and led to a sharp correction the previous week.

Traders and analysts said China’s continued economic recovery helped support equities, however some have started to worry about lofty valuations and turned their eyes to Hong Kong market via the Stock Connect.

“Market volatility could substantially increase, as valuations of the whole A-share market stand at historically high levels,” Qin Bo, an analyst with Everbright Securities, said in a note.

“If the fast rise in asset prices, in particular property prices in the country’s tier one cities, is not curbed effectively, Beijing’s marginal policy tightening could exceed market expectations,” Qin said.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Mostly Higher; “Highly Supportive” RBA Policy Lifts Australian Market

The major Asia-Pacific stock indexes settled mostly higher on Friday, led by strong gains on Wall Street with the benchmark S&P 500 Index hitting a record closing high. Mainland Chinese stocks lagged as they closed lower.

Additionally, Hong Kong stocks saw their best show in three months on strong mainland demand. South Korea shares were boosted by Samsung Electronics. Japanese shares rallied on upbeat earnings and U.S. stimulus hopes. Australia shares posted their best weekly jump in three months as banks shined on central bank policy support.

Cash Market Performance

In the cash market on Friday, Japan’s Nikkei 225 Index settled at 28779.19, up 437.24 or 1.54%. Hong Kong’s Hang Seng Index finished at 29288.68, up 175.18 or +0.60% and South Korea’s KOSPI Index closed at 3120.63, up 33.08 or +1.07%.

In China, the benchmark Shanghai Index settled at 3496.33, down 5.53 or -0.16% and in Australia, the S&P/ASX 200 Index finished at 6840.50, up 75.00 or 1.11%.

Hong Kong Stocks See Best Weekly Show in 3 months on Mainland Demand

Hong Kong stocks closed higher on Friday, helping the indexes post their best weekly performance in three months, following persistent buying activity from mainland investors.

On Friday, mainland investors purchased net of HK$9.4 billion ($1.21 billion) worth of Hong Kong stocks via the Stock Connect linking mainland and Hong Kong, Refinitiv data showed. That came after their buying hit a monthly record of more than HK$300 billion in January, as asset managers looked to the city for bargains.

Kuaishou Technology surged three-fold in its Hong Kong debut to become the fifth-largest listed company in the city, driven by massive demand from mom-and-pop investors for the Chinese online video service operator.

China Shares Post Weekly Gains on Economic Recovery; Sino-US Tensions Weigh

China stocks finished lower, but higher for the week, as investors found support from a continued economic recovery, though Sino-U.S. tensions remained a worry.

Investors continued to trade the economic recovery story, while ample funds still favored leading blue-chips that were seen as “core assets” in the A-share market and Hong Kong, analysts at Dongxing Securities said in a report.

Worries over Sino-U.S. tensions, however, kept gains in check. The United States is deliberating “creating tensions” and disrupting peace and stability, China’s military said, after a U.S. warship sailed through the sensitive Taiwan Strait.

South Korea Shares Rise Boosted by Samsung Electronics; Post Best Week in a Month

South Korean shares rebounded on Friday after Wall Street’s record-setting rally overnight, posting their best weekly gain in a month, boosted by gains in chip giant Samsung Electronics.

Samsung gained as much as 1.82% in early trade after documents filed with Texas state officials showed that the company is considering Austin as one of the sites for a new $17 billion plant.

Its peer SK Hynix jumped 2%. Other heavyweights LG Chem and Samsung SDI gained 2.8% and 3.8%, respectively.

Australia Shares Post Best Weekly Jump in 3 Months as Banks Shine on RBA Policy Support

Australian shares ended higher on Friday, posting their best weekly jump in more than three months, led by gains in financials after the Reserve Bank of Australia (RBA) reiterated extending a supportive monetary policy for as long as needed.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Mostly Higher; Slow China Services Sector Growth Caps Shanghai Index

The major Asia-Pacific stock indexes finished mixed but mostly higher on Wednesday after a majority of regional investors followed Wall Street’s positive lead. The lone loser was China which fell as a private survey showed China’s services sector activity growth slowing sharply in January.

Cash Market Performance

In the cash market on Wednesday, Japan’s Nikkei 225 Index settled at 28646.50, up 284.33 or 1.00%. Hong Kong’s Hang Seng Index finished at 29307.46, up 58.76 or +-0.20% and South Korea’s KOSPI Index closed at 3129.68, up 32.87 or +1.06%.

In China, the Shanghai Index settled at 3517.31, down 16.38 or -0.46%, and in Australia, the S&P/ASX 200 Index finished at 6824.60, up 62.00 or +0.92%.

China’s Services Sector Grows at Slowest Pace in Nine Months, Private Survey Finds

China’s services sector activity grew at its slowest pace in nine months in January, a private sector survey showed on Wednesday, as a flare-up in coronavirus outbreaks weighed on businesses in the world’s second-largest economy.

The Caixin/Markit services Purchasing Managers’ Index (PMI) dropped sharply to 52.0, the lowest since April, from 56.3 in December, while remaining above the 50-mark that separates growth from contraction on a monthly basis.

A sub-index for employment stood at 50.7, its lowest since July last year, and down from 52.0 the previous month, the survey showed. Growth in new export business, which only returned to expansion in November, slowed from the month before.

The loss of momentum was largely in line with the findings in an official survey released on Sunday.

“The services sector’s post-epidemic recovery continued, but at a much slower pace,” said Wang Zhe, senior economist at Caixin Insight Group, in a statement accompanying the data release.

“Some surveyed enterprises said the services market continued to recover, while many said the market had been hurt by the resurgence of the COVID-19 pandemic.”

Caixin’s Composite Manufacturing and Services PMI, also released on Wednesday, slipped to 52.2 in January, from 55.8 the previous month.

Alibaba’s Cloud Division Profitable for the First Time

Alibaba reported profitability for its cloud computing business for the first time in a continued push to diversify its business beyond e-commerce as it faces regulatory scrutiny in China.

Alibaba previously said that it expects its cloud division to become profitable within its current fiscal year which began in April and ends on March 31, 2021.

The milestone will be welcomed by investors who have put great importance on cloud computing to drive Alibaba’s future growth. Current chairman and CEO Daniel Zhang told CNBC in a 2018 interview that cloud computing would be Alibaba’s “main business” in the future.

“Our cloud computing business continues to expand market leadership and show strong growth, reflecting the massive potential of China’s nascent cloud computing market as well as our years of investment in technology,” Alibaba CEO Daniel Zhang said in a press release.

South Korea Stocks Rise after Reports of Kia-Apple Deal

South Korean shares rose for a third straight session on Wednesday, as auto shares were boosted by reports of a possible $3.6 billion deal between Kia Corp and Apple Inc.

Kia Corp, an affiliate of Hyundai Motor Group, surged as much as 14.5% after local media reported the South Korean automaker and Apple will likely sign a deal in mid-February for the U.S. tech giant’s car production.

Hyundai Motor Co rose 2.5% as the country’s largest carmaker reported robust January global sales.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Set to Open Higher Following Wall Street’s Lead

The major Asia-Pacific stock indexes are expected to open higher on Wednesday, following Wall Street’s lead. Investors are hoping to build on the strong gains attained the previous session.

Stocks in the region advanced on Tuesday following another overnight jump on Wall Street. Gains were driven by a strong performance in Hong Kong. The Taiex in Taiwan also saw strong gains as it rose 2.27% to close at 15,760.05.

Tuesday’s Cash Market Performance

In the cash market on Monday, Japan’s Nikkei 225 Index settled at 28362.17, up 271.12 or +0.97%. Hong Kong’s Hang Seng Index finished at 29248.70, up 355.84 or +1.23% and in South Korea, the KOSPI closed at 3096.81.

In China, the Shanghai Index settled at 3533.68, up 28.40 or +0.81% and in Australia, the S&P/ASX 200 Index finished at 6762.60.

Hong Kong Stocks Climb on Sustained Mainland Demand

Hong Kong stocks ended higher on Tuesday, underpinned by consumer and industrial firms, as mainland investors continued to pour money into the Asian financial hub.

Leading the gains, the Hang Seng consumer discretionary index and Hang Seng industrials index closed up 3.2% and 4.3%, respectively.

Mainland investors on Tuesday bought a net HK$17 billion worth of Hong Kong stocks via the Stock Connect linking mainland and the Asian financial hub, extending their buying spree. In January, their southbound purchases totaled HK$310 billion the highest on a monthly basis, according to HKEX.

Sentiment Boosted in China by PBOC

Sentiment got a boost as China’s central bank, the People’s Bank of China (PBOC), injected liquidity, easing worry over persistently tight liquidity.

China’s short-term money rates eased to two-week lows, as signs of liquidity tension in the interbank money markets started to fade. The PBOC injected a net 78 billion Yuan ($12.08 billion) into money markets.

Adding to market optimism, China reported the fewest new COVID-19 cases in a month as imported cases overtook local infections.

RBA Keeps Cash Rate Steady, Surprises with Additional QE

The Reserve Bank of Australia (RBA) on Tuesday announced its decision to maintain its cash rate at 0.1% as well as purchase an additional 100 billion Australian Dollars of bonds (approx.. $76.32 billion).

In a statement, RBA Governor Philip Lowe said:  The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 percent target range.”

“For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labor market,” Lowe said. “The Board does not expect these conditions to be met until 2024 at the earliest.”

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Close Higher after Reversing Earlier Losses; Chinese Investor Silver Buying Escalates

The major Asia-Pacific stock indexes closed higher across the board on Monday after a rocky start. Asian shares traded lower early in the session after U.S. futures opened weak, but they turned higher as their U.S. counter-parts recouped their losses as newly empowered retail investors turned their attention to silver, promising a respite to some hard-hit hedge funds.

Cash Market Performance

In the cash market on Monday, Japan’s Nikkei 225 Index settled at 28091.05, up 427.66 or +1.55%. Hong Kong’s Hang Seng Index finished at 28892.86, up 609.15 or +2.15% and South Korea’s KOSPI Index closed at 34056.53, up 80.32 or +2.70%.

In China, the benchmark Shanghai Index settled at 3505.28, up 22.21 or +0.64% and Australia’s S&P/ASX 200 Index finished at 6663.00, up 55.60 or +0.84%.

Several Catalysts Behind Price Recovery

Chinese blue chips gained as the country’s central bank injected more cash into money markets. This, despite data from two surveys showing factory activity slowed in January as restrictions took a toll in some regions.

In South Korea, the KOSPI jumped over 3% during the session as shares of biopharmaceutical firm Celltrion soared 14.51%.

The benchmark index in Australia edged higher, led by a surge in shares of several Australia-listed miners as traders reacted to a huge gain in spot silver prices.

China Manufacturing Growth Slows

The unofficial Caixin/Markit manufacturing purchasing managers’ index (PMI) came in at 51.5 for January, missing expectations for 52.7 according to a poll by Reuters. It was, however, still above the 50-point mark that separates expansion from contraction.

The data from Caixin came after Beijing released its official manufacturing PMI data over the weekend, with the measure coming in at 51.3 for January. That was also below expectations, with analysts polled by Reuters anticipating 51.6 for the month.

Hong Kong Shares Rise as Mainland Buying Lifts Tech Names

Hong Kong shares ended higher on Monday, lifted by high-tech and consumer firms, as mainland investors continued to purchase shares through the Stock Connect program.

Mainland investors purchased a net HK$16.7 billion ($2.15 billion) worth of Hong Kong, according to Refinitiv data.

Buying into ‘Poor Man’s Gold’, Chinese Investors Jump on Silver

Chinese investors rushed into silver investments on Monday, pushing up Shanghai silver prices while boosting performances of related stocks and funds, matching calls by global retail investors to boost prices of the precious metal.

Retail traders on Reddit and other social media who caused a rally in share prices of U.S. video game retailer GameStop Corp have now turned their attention to silver, leading Chinese investors to also jump on the bandwagon.

China’s domestic silver prices rose to their highest since September. Prices on the Shanghai Futures Exchange closed up 9.27% at 5,939 Yuan per Kilogram.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Markets: Called Lower Amid US Stock Futures Weakness, Bubble-Warning in China

An early look at the Asia-Pacific stock markets on Monday has Australian shares poised to open lower, with traders mostly reacting to the sharp sell-off in U.S. equities on Friday amid a battle between Wall Street hedge funds and aggressive retail investors.

Domestically, a fresh lockdown in the country’s fourth-most populous city was likely to weigh on domestic risk appetite.

According to reports from over the weekend, the country’s 14-day streak of no locally acquired cases came to an end as a security guard working in hotel quarantine in Perth tested positive for COVID-19, prompting authorities to order a five-day lockdown in the city.

Weekly Cash Market Performance

In the cash market last week, Japan’s Nikkei 225 Index settled at 27663.39, down 986.06 or -3.38%. South Korea’s KOSPI finished at 2976.21, down 164.42 or -5.24% and Hong Kong’s Hang Seng Index closed at 28283.71, down 1164.14 or -3.95%.

In China, the benchmark Shanghai Index settled the week at 3483.07, down 123.68 or -3.43% and Australia’s S&P/ASX 200 Index finished at 6607.40, down 193.00 or -2.84%.

US Stock Market to Set Early Tone in Asia-Pacific Markets

U.S. stock index futures are expected to dictate the direction of the markets in the Asia-Pacific region on Monday as the major U.S. averages try to claw back some of the losses from the market’s worst week since October.

Last week, all three major U.S. averages dropped more than 3% for their worst weekly performance since October. The Dow and S&P also posted losses for January – the first negative month in four – although the NASDAQ did manage to post a gain for the month.

China Asset-Bubble Warning Threatens Stock Frenzy in Hong Kong

While U.S. traders focus on the possibility of more stock market regulation in the wake of volatility in heavily shorted stocks, and a growing skirmish between hedge funds and aggressive, organized retail traders, Bloomberg wrote, “A chill swept through Chinese financial markets after the central bank withdrew cash from the banking system and an official warned about bubbles.”

The People’s Bank of China drained about $12 billion via open-market operations on Tuesday. The decision was unusual in the weeks before the Lunar New Year holiday, which in 2021 falls in mid-February, because residents typically need more cash to pay for seasonal travel and gifts. It also went against recent reports in Chinese newspapers that liquidity wouldn’t be tightened before the holidays.

Bloomberg added, “While Tuesday’s withdrawal was small in isolation, it added to signs that Beijing is growing wary of how cheap and plentiful liquidity has stoked excess in markets. PBOC adviser Ma Jun told local media that risks of asset bubbles – such as in the stock or property market – will remain if China doesn’t shift its focus toward job growth and inflation management instead.”

The news likely contributed to last week’s 3.43% loss in the Shanghai Index and the 3.9% decline in Hong Kong’s Hang Seng Index.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Markets Tumble as US Retail Volatility Spooks Investors into Booking Profits

The major Asia-Pacific stock indexes were down across the board on Friday as many investors booked profits ahead of the weekend, with South Kospi leading losses among the region’s major markets.

A shift in risk sentiment was mostly responsible for today’s weak performance as investors expressed concerns over rising global coronavirus cases, a slower-than-expected vaccine rollout and uncertainty over the size and timing of President Biden’s stimulus package proposal.

Asian markets were spooked that a coordinated assault by small traders organizing over online forums to force U.S. hedge-funds to reverse short positions – which has led to sharp volatility in some stocks – could spill over into other markets.

Cash Market Performance

In Japan, the Nikkei 225 Index settled at 27663.39, down 534.03 or -1.89%. Hong Kong Hang Seng Index finished at 28283.71, down 267.06 or -0.94% and South Korea’s KOSPI Index closed at 2976.21, down 92.84 or -3.03%.

In China, the Shanghai Index settled at 3483.07, down 22.11 or -0.63% and Australia’s S&P/ASX 200 Index finished at 6607.40, down 42.30 or -0.64%.

South Korea Shares Drop as Foreigners Lead Profit Taking

South Korean shares fell for a fourth consecutive session on Friday on heavy profit-taking by foreign investors as Wall Street volatility from GameStop losses weighed on sentiment.

It was foreign-driven profit-taking, as some are getting cold-feet having seen how bad market volatilities can get in the U.S., said Lee Kyung-min, an analyst at Daishin Securities.

Asian retail investors, emboldened by the meteoric rise of U.S. videogame retailer GameStop, are taking on short sellers and making their brokers nervous enough to cut off margin lending.

Hong Kong Stocks Notch 4th Monthly Gain on Record Mainland Demand

Hong Kong stocks ended lower on Friday, though the index posted its fourth consecutive monthly gain – the longest winning streak since early 2019 – as mainland buying hit a monthly record via the Stock Connect linking it and the Asian financial hub.

As of Thursday, mainland investors purchased net of around HK$300 billion ($38.70) worth of Hong Kong stocks via the Stock Connect, and their buying was set to hit a monthly record, according to the HKEX.

Nikkei Slumps on Month-End Selling, Fears Over Retail Volatility

Japanese shares tumbled for a second day on Friday, giving up early gains, as a boost from technology companies reporting upbeat earnings was overshadowed by investors’ profit-taking and rebalancing at the end of month.

Investors grew nervous about further market turbulences as retail trading frenzy boosts market volatility and talk of more position unwinding by damaged players.

The losses accelerated after Citron Research, a short-selling hedge fund caught in the short-squeezing of Gamestop shares, said it will make a major announcement later in the day.

Australian Shares End Lower on Mining Losses

Australian shares closed lower on Friday, dragged by mining stocks after Chinese iron ore futures slid, with the benchmark index posting its sharpest weekly loss since late October.

Miners closed 1.8% lower and clocked their worst week since March 13, 2020 with a 6.6% weekly drop. Demand worries dented Chinese iron ore futures in recent sessions after the commodity’s sharp rally towards the end of 2020.

Rio Tinto fell 3% and hit its lowest in two months, while rival BHP dropped 1.6%. Both companies enjoyed sharp share gains last year, benefiting from soaring prices of the commodity.

For a look at all of today’s economic events, check out our economic calendar.

Asia-Pacific Shares Pressured by Liquidity Fears in China, US Stimulus Worries

The major Asia-Pacific stock indexes finished lower on Tuesday, with Hong Kong shares posting the biggest losses among the region’s major markets. Markets in Australia were closed for a holiday.

There wasn’t a central theme in the markets either with Hong Kong investors reacting to a big drop in Chinese tech giant Tencent, Chinese shares tumbling amid speculation of policy tightening and South Korea falling on liquidity fears in China and U.S. stimulus worries.

Cash Market Performances

In the cash market on Tuesday, Japan’s Nikkei 225 Index settled at 28546.18, down 276.11 or -0.96%. Hong Kong’s Hang Seng Index finishing at 29391.26, down 767.75 or -2.55% and South Korea’s KOSPI Index closing at 3140.31, down 68.68 or -2.14%.

Australia was closed, but in China, the Shanghai Index settled at 3569.43, down 54.81 or -1.51%.

Hong Kong Shares Close 2.5% Lower as Stimulus Concerns Dent Risk Appetite

Hong Kong shares slumped 2.5% on Tuesday, pulling back sharply from the previous session’s rally, as global investor concerns over the timing of aggressive U.S. stimulus and rising Sino-U.S. tensions whacked risk appetite.

Investors are jittery about the timing of U.S. stimulus, with Senate Democratic Majority Leader Chuck Schumer warning a stimulus bill may not pass for four to six weeks.

China-U.S. relations also continue to weigh on sentiment. China said Tuesday it will conduct military exercises in the South China Sea this week, just days after Beijing bristled at a U.S. aircraft carrier group’s entry into the disputed waters.

The Index was also pulled lower by Tencent Holdings Ltd, which fell 6.26% a day after heavy buying by mainland investors drove it nearly 11% higher.

China Shares End Lower Amid Speculation of Policy Tightening

China’s blue-chip stock index fell on Tuesday, marking its biggest daily loss since September after touching a 13-year high in the previous session, amid tightening liquidity conditions and Sino-U.S. tensions.

Financial firms came under pressure against a backdrop of tightening liquidity conditions. Short-term rates jumped to pre-COVID levels on Tuesday, with some investors speculating that the central bank might adopt a tightening bias in its monetary policy.

South Korea Shares Drop on Liquidity Fears in China, U.S. Stimulus Worries

South Korean stocks fell on Tuesday as foreign investors turned net sellers due to liquidity fears after China’s central bank withdrew cash from its banking system and as uncertainty over a U.S. stimulus package lingered.

Short-term borrowing costs in China jumped to their pre-COVID-19 levels on Tuesday, pressured by the combination of the central bank’s extended net drain of cash from the financial system and higher holiday demand.

For a look at all of today’s economic events, check out our economic calendar.