Asian equities, commodities rise on China outlook: markets wrap

Marty Batteen

Asian equities and commodities rose as traders bet on further reopening of the Chinese economy from Covid restrictions. Currencies of materials and energy exporters climbed.

A benchmark of Asian shares headed for its highest close since August and was approaching a technical bull market. The greenback fell versus most of its major counterparts, with notable weakness versus the Norwegian krone and the Australian and Canadian dollars.

China’s offshore yuan strengthened through the 7-per-dollar level for the first time in nearly three months. The Hang Seng China Enterprises Index rallied as much as 4%.

Oil advanced on the prospect of more demand from China, as OPEC+ kept output steady and sanctions on Russian crude kicked in. Iron ore and copper climbed.

Chinese authorities eased Covid testing requirements across major cities over the weekend as Beijing appears to be engineering a gradual shift away from its strict Covid Zero policy amid elevated cases and public protests.

Meanwhile, Treasury yields climbed during Asian trading after last week’s wild moves following the US jobs report. Government bond yields in Australia and New Zealand fell.

Stronger-than-expected US jobs figures on Friday prompted traders to increase their wagers on where rates will top out in the current tightening cycle, rather than changing their bets for the size of the increase at the Federal Reserve’s December meeting. Policymakers are still expected to deliver a downshift to a 50 basis points hike at the gathering.

Employers added more jobs than forecast and wages surged by the most in nearly a year. Nonfarm payrolls increased 263,000 in November, while the unemployment rate held at 3.7%. Average hourly earnings rose twice as much as predicted.

Key events this week:

  • S&P Global PMI for the Euro zone, Monday
  • US factory orders, durable goods orders, ISM services index, Monday
  • ECB President Christine Lagarde speaks, Monday
  • Australia interest rate decision, Tuesday
  • US trade, Tuesday
  • EIA crude oil inventory report, Wednesday
  • Euro zone GDP, Wednesday
  • US MBA mortgage applications, Wednesday
  • ECB President Christine Lagarde speaks, Thursday
  • US initial jobless claims, Thursday
  • China PPI, aggregate financing, money supply, new yuan loans, Friday
  • US PPI, wholesale inventories, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.2% as of 2:10 p.m. Tokyo time. The S&P 500 fell 0.1% on Friday
  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 fell 0.4%
  • Japan’s Topix index fell 0.6%
  • South Korea’s Kospi index fell 0.8%
  • Hong Kong’s Hang Seng Index rose 3%
  • China’s Shanghai Composite Index rose 1.4%
  • Australia’s S&P/ASX 200 Index rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.4%
  • The euro rose 0.4% to $1.0580
  • The Japanese yen was little changed at 134.39 per dollar
  • The offshore yuan rose 0.9% to 6.9552 per dollar

Cryptocurrencies

  • Bitcoin rose 1.5% to $17,369.94
  • Ether rose 1.8% to $1,300.33

Bonds

  • The yield on 10-year Treasuries advanced five basis points to 3.53%
  • Australia’s 10-year yield declined two basis points to 3.37%

Commodities

  • West Texas Intermediate crude rose 0.8% to $80.60 a barrel
  • Spot gold rose 0.6% to $1 808.28 an ounce

© 2022 Bloomberg

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