Japanese shares rose in Asia, as financial stocks gained from the prospect of higher lending rates, sending a Japan equity benchmark closer to a record high. Bank and insurance stocks in Japan were among the largest contributors to the Topix index’s gain, after domestic 10-year yields continued their rise above 1% on bets that the central bank will raise policy rates. Hong Kong stocks also advanced after Chinese electric vehicle makers gained following stronger sales and deliveries for June. Most other regional benchmarks fluctuated in a narrow range as traders weighed the possibility of another Donald Trump presidency in the wake of his debate with Joe Biden last week. Equities in Australia and South Korea slipped. Contracts for US stocks slipped during Asian hours, despite Wall Street edging higher Monday amid a rally in tech megacaps. The greenback strengthened against all of its Group-of-10 peers, while 10-year Treasury yields consolidated after rising seven basis points Monday to approach 4.5%. The prospect of a Bank of Japan interest rate hike coming later this month increased after an index showed confidence among the nation’s large manufacturers rose from three months earlier. Vanguard sees the yen at risk of falling toward 170 per dollar if potential BOJ policy changes this month fail to boost the country’s bond yields.
In China, pessimism about the domestic economy has sparked a surge in demand for government debt. The central bank said it will borrow government bonds from primary dealers, a sign it may be contemplating selling securities to cool down the rally. After last week’s debate hurt his chances of winning reelection, Wall Street strategists are urging clients to position for sticky inflation and higher long-term bond yields. Meanwhile, Biden called on voters to “render a judgment” on Trump, after a Supreme Court ruling paved the way for the presumptive Republican presidential nominee to potentially escape prosecution for his role in the Jan. 6 US Capitol riot. The selloff in Treasuries “continued overnight as the rates market starts to price in a Trump election victory, which would likely see continued federal deficits and potentially higher inflation,” said Tony Sycamore, a market analyst at IG Australia. “Higher US Treasury yields will bring with it a stronger US dollar, both of which would be problematic for many Asian share markets. In Europe, European Central Bank President Christine Lagarde signaled that there is not sufficient evidence that inflation threats have passed, feeding expectations that officials will take a break from cutting interest rates this month. The euro was little changed after French election results suggested there’s a smaller probability of extreme policies coming from the far-right. In commodities, oil traded near a two-month high on escalating Middle East tensions and concerns over the Atlantic hurricane season as Beryl is named a category 5 hurricane. Elsewhere, gold was little changed. US After Hours Relatively quiet session; SAVE +0.7% up on new CFO announcement; ADEA -0.8% down on license agreement with X Corp (formerly Twitter).
Nikkei +1.05% Hang Seng +0.40% CSI -0.06% Shanghai +0.12% Shenzen -0.56%
Eur$ 1.0732 CNH 7.3057 CNY 7.2712 JPY 161.63 GBP 1.2634 CHF 0.9039 RUB 856.8545 TRY 32.6678 WTI$ 83.51 +0.48% Gold 2,325.32 -0.30% BTC 63,118 -0.15% ETH 3,456
S&P -0.13% Nasdaq -0.20% EuroStoxx -0.04% FTSE -0.30% Dax -0.12% SMI -0.20%
Macro :
- Activist Investor Campaigns Hit Record High, Driven by Japan
- Hedge Funds Net Sell Global Stocks Fastest in Two Years: Goldman
- Hedge Funds Sold TMT Stocks by Most on Record, Goldman Says
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