Stocks in Asia Climb, Dollar Steady as Yields Drop

Stocks in Asia rose and the dollar traded at its highest since January, while investors maintained focus on the U.S. Treasury market, where the 10-year note flirted with 3 percent.

The greenback preserved overnight gains, with the 10-year Treasury yield remaining just below its highest level since 2014. As the yen retreated, equities in Japan climbed, with the Topix index at its highest in almost two months, while stocks in Hong Kong and Australia also advanced. Chinese shares rallied on signs the government is moving to ease some policies that it had sought to rein in a credit binge in some parts of the economy. FTSE 100 futures climbed with U.S. equity-index contracts.

South Korean shares fell as SK Hynix Inc. joined a string of semiconductor makers whose earnings disappointed investors. United Co. Rusal surged more than 30 percent in Hong Kong trading after the U.S. softened its position on sanctions against the aluminum producer.

Investors are questioning the implications of rising bond yields that were in part spurred by higher commodity prices and concern surrounding their inflationary effect on the wider economy. Volatility in interest-rate markets remains low and equity volatility is well off the highs from earlier this year, indicating investors believe rising borrowing costs may not be enough to derail further stock gains for now.

“For us it’s more the reasons why we’re seeing the move: better growth outlook, a little bit more inflation and faster rate hikes being priced in by the market,” Kerry Craig, Melbourne-based global market strategist at JPMorgan Asset Management, told Bloomberg TV. “It should be reaffirming the fact that we see a global economy that’s looking relatively healthy.”

Technology stocks have been under pressure with a swath of companies reporting disappointing earnings and raising questions about the outlook for smartphones. The Philadelphia Semiconductor Index is down more than 7 percent over the past four days.

Elsewhere, aluminum extended its biggest slump since 2005 after the Treasury Department signaled it may lift Rusal sanctions if Oleg Deripaska divests control. Oil was back above $69 a barrel.

These are some important events coming up this week:

French President Emmanuel Macron continues a three-day visit to the U.S.

U.S. GDP and jobless claims are due.

Earnings season continues. Among those reporting: Amazon.com, Samsung and Credit Suisse.

The European Central Bank has a rate decision on Thursday. Investors will watch for any sign that officials are preparing a shift in stimulus plans for their June meeting.

Bank of Japan announces its latest policy decision Friday and releases a quarterly outlook report.

And these are the main moves in markets:

Stocks

Japan’s Topix index added 1.1 at the close in Tokyo.

Australia’s S&P/ASX 200 Index advanced 0.7 percent.

South Korea’s Kospi dropped 0.3 percent.

Hong Kong’s Hang Seng Index climbed 1 percent. The Shanghai Composite Index gained 1.8 percent.

Futures on the S&P 500 Index rose 0.3 percent after the underlying gauge closed little changed on Monday.

FTSE 100 futures rose 0.2 percent as of 7:03 a.m. in London.

Currencies

The Bloomberg Dollar Spot Index was flat after rising 0.8 percent to the highest in almost 14 weeks Monday.

The euro was steady at $1.2214.

The pound traded at $1.3941.

The Australian dollar was little changed at 76.04 U.S. cents after falling as low as 75.80, the weakest against the greenback since December.

The yen declined 0.1 percent to 108.83 per dollar after sinking 1 percent Monday.

Bonds

The yield on 10-year Treasuries fell one basis point to 2.96 percent, after reaching the highest in more than four years.

Japan’s 10-year bond yield was steady at 0.060 percent.

Australia’s 10-year yield fell almost three basis points to 2.84 percent.

German 10-year bund yields fell almost one basis point to 0.63 percent.

Commodities

West Texas Intermediate crude rose 0.9 percent to $69.26 a barrel.

Gold rose 0.1 percent to $1,326.73 an ounce after slipping 0.9 percent.

LME aluminum futures dropped 2 percent to $2,246.50 a metric ton. The spot price sunk 7.5 percent on Monday.

Sources: Bloomberg