(Bloomberg) — Hong Kong stocks outperformed otherwise weak Asian markets, while the region's bonds fell as traders readjusted their expectations for U.S. Federal Reserve easing.
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Hong Kong stock prices followed gains in mainland stocks on Monday, surging after two trading sessions. Xiaomi made the biggest contribution to improving the city's benchmark after its electric vehicle debut. The rise in Chinese stocks has come to a halt.
“We strongly believe that the onshore stock market and the Hong Kong stock market have already bottomed out and the rebound could continue into the second quarter,” said Dickie Wong, research director at Kingston Securities. It's very cheap and the positioning is still light.” More policy catalysts are needed to boost sentiment. ”
Japanese stocks erased morning gains as the yen strengthened after falling to near its lowest level this year against the dollar on Monday. The decline raised the risk that Japanese authorities would intervene in the market.
After stocks posted their best start to the year since 2019, Asian stock bulls appear to have hit a wall early in the second quarter, with doubts over the amount of rate cuts by the Fed and caution ahead of key economic data releases later this week. It oppresses emotions.
U.S. stock futures were slightly lower on Monday as the S&P 500 index fell 0.2% while the Nasdaq index rose by a similar amount.
In the bond market, yields in Australia and New Zealand rose in response to moves in US Treasuries. U.S. bonds steadied in Asian trade after falling across the curve on Monday as manufacturing expanded unexpectedly for the first time since September 2022, raising input costs. The 10-year Treasury yield rose more than 10 basis points.
The report lowered the amount of Fed relief factored into this year's swap contracts to about 65 basis points, less than policymakers expected.
BMO Capital Markets' Ian Lingen and Beil Hartman say the market seems “comfortable” with pointing to manufacturing sell-offs as a trigger for U.S. Treasuries, but the market has already moved ahead of the headlines. Bond sales were reportedly underway.
“Monday's futures market price action suggests that the pendulum of US interest rate sentiment may be shifting in a hawkish direction, but it goes without saying that expectations will become more meaningful as more data emerges. “There is plenty of room for change,” they noted.
The Institute for Supply Management's manufacturing index rose to 50.3 last month. Although the index was barely above the 50 mark, which is the dividing line between expansion and contraction, the 16th consecutive month of contraction in economic activity was halted. At the same time, the group's price paid index rose to 55.8, its highest level since July 2022.
Data later this week is expected to show employment growth continues in March, although wage growth slows. Fed Chairman Jerome Powell, who is scheduled to speak on Wednesday, said Friday that officials are waiting for further evidence that prices are being controlled, and that cutting interest rates is not appropriate until officials are confident that inflation is under control. He added that there was no.
Reserve Bank of Australia Assistant Governor Christopher Kent said on Tuesday the central bank would switch to a new system for implementing monetary policy as passive quantitative tightening would lead to a decline in the banking system's foreign exchange reserves.
Elsewhere, Indonesia's rupiah fell to its lowest value against the dollar since 2020 as foreign funds continued to sell municipal bonds on concerns about the incoming government's spending pledges.
In the commodity market, rising geopolitical risks in the Middle East and tight supplies from Mexico kept crude oil near a five-month high, contributing to the price rise. Gold prices were stable after hitting a record high in the previous session.
This week's main events:
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Eurozone S&P Global Manufacturing PMI, Tuesday
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US factory orders, light vehicle sales, JOLTS job openings, Tuesday
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Fed's John Williams, Loretta Mester, Mary Daly and Michelle Bowman speak on Tuesday
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St. Louis Fed President Alberto Moussallem will be sworn in on Tuesday. He replaces James Bullard.
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China Caixin releases PMI on Wednesday
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Eurozone CPI, unemployment rate, Wednesday
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Japanese services PMI, Wednesday
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US ADP Employment, ISM Services, Wednesday
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Federal Reserve Chairman Jerome Powell speaks on Wednesday
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Fed's Austan Goolsby, Adrianna Kugler and Michelle Bowman will also speak Wednesday.
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Eurozone S&P Global Services PMI, PPI, Thursday
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U.S. new jobless claims, Challenger layoffs, Thursday
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Fed's Loretta Mester, Albert Moussallem, Thomas Barkin, Patrick Harker and Austan Goolsby speak Thursday
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European Central Bank releases report on March interest rate decisions on Thursday
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Eurozone retail sales Friday
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U.S. unemployment rate, nonfarm payrolls, Friday
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Fed's Michelle Bowman, Thomas Barkin and Laurie Logan speak on Friday
Some of the major developments in the market include:
stock
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S&P 500 futures were down 0.1% as of 1:28 p.m. Tokyo time.
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Japan's TOPIX fell 0.5%
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Australia's S&P/ASX 200 falls 0.3%
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Hong Kong's Hang Seng rose 2.4%.
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Shanghai Composite: Almost no change
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Euro Stoxx50 futures little changed
currency
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Bloomberg Dollar Spot Index little changed
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The euro fell 0.1% to $1.0731.
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The Japanese yen remained almost unchanged at 151.75 yen to the dollar.
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The offshore yuan was almost unchanged at 7.2624 yuan to the dollar.
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The Australian dollar was almost unchanged at US$0.6488.
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The British pound was almost unchanged at $1.2543.
cryptocurrency
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Bitcoin fell 4.6% to $66,548.82.
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Ether fell 3.8% to $3,362.94.
bond
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The 10-year government bond yield was almost unchanged at 4.31%.
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Japan's 10-year bond yield fell 1.5 basis points to 0.725%.
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The Australian 10-year bond yield rose 7 basis points to 4.06%.
merchandise
This article was produced in partnership with Bloomberg Automation.
–With assistance from Charlotte Yang.
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