(Bloomberg) — Asian stocks pared earlier losses as reports of a planned long-term Chinese bond sale fueled optimism that the money raised will boost the economy.
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Hong Kong's stock index rose to its highest level since August following the news, while mainland-listed stocks trimmed declines. China's 1 trillion yuan ($138 billion) long-term private bond issuance program will begin on Friday and will eventually include 20-year debt, 30-year bonds and 50-year securities, according to people familiar with the matter.
News of the planned debt issuance boosted sentiment towards regional stocks after weak Chinese data published over the weekend led to initial losses in stocks. The specter of further trade tensions between the US and China has also intensified with a report on the extent to which President Biden is willing to increase tariffs on Chinese electric cars.
“You're looking at a slightly distorted growth outlook” for China, Sonal Desai, chief investment officer at Franklin Templeton, said in an interview with Bloomberg Television before news of the debt sale broke. He said that regardless of who is elected in the US elections in November, we will witness an escalation in trade tensions between the United States and China.
There was little change in the Bloomberg Dollar Index and the benchmark 10-year Treasury bonds. Japanese bonds fell after the central bank offered to buy a smaller amount of government debt than at a previous auction.
Investors are scrutinizing US officials' statements for clues on how long the Federal Reserve will keep interest rates at high levels. Dallas Fed President Lori Logan said last week it was still too early to consider cutting borrowing costs, while Governor Michelle Bowman said she did not expect it would be appropriate for the Fed to cut interest rates in 2024.
Potential key catalysts for markets this week include China's interest rate decision on Wednesday and the US inflation reading for April on the same day.
“There is growing confidence in the Chinese market, although economic indicators do not fully support this optimism,” said Tariq Horshani, Head of Brokerage at Maybank Securities Pte. “The movement appears to be driven more by technical factors than fundamentals.”
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Weak Chinese data weighed on oil on Monday, with commodity traders also eyeing the OPEC+ meeting on supply policy.
Iraqi Oil Minister Hayan Abdul Ghani initially said over the weekend that Baghdad had reduced its production enough and would not agree to more. But he later said that any decision is a matter for OPEC, and that it will adhere to whatever the group decides. OPEC+ meets on June 1.
Elsewhere this week, the euro zone is set to report inflation and growth figures while a host of Federal Reserve officials including Chair Jerome Powell are scheduled to speak.
US and European stock futures were little changed.
Some key events this week:
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Australian Business Confidence, Monday
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Food prices in New Zealand, inflation expectations, Monday
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India Trade, Consumer Price Index, Monday
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Eurozone finance ministers meet in Brussels on Monday
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Australia's Budget 2024-25, Tuesday
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Japanese Producer Price Index, Tuesday
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German CPI and ZEW survey forecasts on Tuesday
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UK Unemployment Claims, Unemployment, Tuesday
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US Producer Price Index, Tuesday
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Federal Reserve Chairman Jerome Powell and ECB Governing Council member Klaas Knott speak on Tuesday
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Interest rate decision in China, Wednesday
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Eurozone industrial production, GDP, Wednesday
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US CPI, Retail Sales, Business Inventories, Imperial Manufacturing, Wednesday
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Unemployment in Australia, Thursday
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Japanese GDP, Industrial Production, Thursday
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China real estate prices, retail sales, industrial production, Friday
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Eurozone consumer price index, Friday
Stores
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S&P 500 futures were little changed as of 12:18 p.m. Tokyo time
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Nikkei 225 futures fell 0.1%.
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There was little change in the Japanese Topix index
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Australia's S&P/ASX 200 index fell 0.3%.
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The Hang Seng Index in Hong Kong rose 0.4%.
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Shanghai Composite Index fell 0.3%
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Euro Stoxx 50 futures were little changed
Currencies
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The Bloomberg Dollar Spot Index was little changed
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There was little change in the euro at $1.0770
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There was little change in the Japanese yen at 155.80 to the dollar
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There was little change in the yuan in external transactions at 7.2397 to the dollar
Digital currencies
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Bitcoin fell 0.8% to $60,812.87
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Ethereum fell 1.8% to $2,870.18
Bonds
Goods
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West Texas Intermediate crude fell 0.2 percent to $78.07 a barrel
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Gold in spot transactions fell 0.2 percent to $2,356.90 per ounce
This story was produced with assistance from Bloomberg Automation.
–With assistance from Ishika Mukherjee.
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