BackAsian stocks slip as bond slump continues, oil falls
New Zealand's dollar strengthened amid a surge in retail sales, while oil extended losses
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Wellington: Asian stocks retreated as the selloff in global bonds accelerated, with Japanese yields rising to their highest level since March. New Zealand’s dollar strengthened amid a surge in retail sales, while oil extended losses.
The MSCI Asia Pacific Index lost 0.2% by 10:05 am in Tokyo, falling from a one-week high as Japan’s Topix index slipped 0.3%. US stock futures advanced 0.1%. Yields on 10-year Japanese government debt climbed for a third day, to 0.46%, while Australian bond rates jumped six basis points. The kiwi added 0.8% as the Bloomberg Dollar Spot Index maintained declines at an almost four-month low. US oil slipped for a second day, while crops climbed.
Concern sovereign debt sales are swamping demand is exacerbating the worldwide bond slump, which has seen more than $400 billion in value erased from the market in about three weeks. US producer prices and jobless claims are due Thursday, after a stagnant retail sales report cast doubt on the economy’s recovery and the timeline for the Federal Reserve to start raising interest rates. Japan posts data on machine-tool orders and the Philippines reviews borrowing costs.
“I expect global yields to rise for the rest of the month — bonds were overbought," Mitsushige Akino, executive officer at Ichiyoshi Asset Management Co. in Tokyo said by phone. “That said, escaping deflation is no easy task, and there’s no change to the view that monetary easing from the ECB will continue."
Rising yields
Ten-year Japanese yields advanced two basis points, or 0.02 percentage point, bringing their three-day gain to seven basis points. Rates on similar-maturity Australian bonds climbed to 3.02%, while yields on New Zealand and Singaporean notes rose at least three basis points. Yields on Treasuries due in a decade were little changed at 2.28% following last session’s four basis-point increase.
Bonds across the euro area dropped Wednesday on concern sales from Asia to the US will overwhelm demand for sovereign securities. The US plans to sell $16 billion of 30-year bonds Thursday, with yields on the debt holding at 3.09% after rising seven basis points in New York.
German bunds, which have been at the epicenter of the month-long selloff in fixed-income, saw yields climb for the 12th time in 13 sessions. The European Central Bank’s asset- buying program helped push German yields to a record low in April, while signs of price growth in the region sent them to as high as 0.78% last week.
Stock markets
Japan’s Topix gauge fell for the first time in five days, while Australia’s S&P/ASX 200 Index slipped 0.6% after two days of gains. The Kospi index in Seoul added 0.2%. The Standard & Poor’s 500 Index in the US was little changed Wednesday after two days of declines.
South Korea reports on money supply Thursday, while India updates wholesale prices. Indonesian markets are closed for a holiday.
Hang Seng Index futures in Hong Kong rose 0.1% in most recent trading, while contracts on the Hang Seng China Enterprises Index, a gauge of mainland shares traded in the city, fell 0.2%. Futures on the FTSE China A50 Index added 0.1% in Singapore.
The kiwi climbed a third day, rising to 75.45 US cents after retail sales expanded 2.7% in the first quarter, beating the 1.6% projected by economists.
Dollar index
The yen held a two-day, 0.8% advance, trading at 119.27 per dollar, while the euro was steady at $1.1350. The Korean won, Thai baht and Malaysian ringgit all added at least 0.2%. The Bloomberg dollar gauge, which tracks the greenback against 10 major peers, was little changed at 1,154.57 after sinking to the lowest level since 27 January Wednesday following the retail sales report.
“While US growth is rebounding, it may not rebound as far and as fast as many investors had expected," Russ Koesterich, global chief investment strategist at New York-based BlackRock Inc., the world’s biggest asset manager, said on Bloomberg TV.
US economic indicators have missed expectations since January, according to an index compiled by Citigroup Inc. that measures data surprises relative to market expectations, suggesting the Fed isn’t getting any closer to raising rates.
West Texas Intermediate crude slipped 0.6% to $60.17 a barrel after US government data showed refineries reduced their oil use by the most in almost four months.
Wheat for July delivery climbed a second day, gaining 0.2% to $4.8225 a bushel, while futures on corn and soybeans advanced at least 0.1%. Bloomberg
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