(Reuters)-Hong Kong (Reuters) – Mainland On Thursday, stocks in China and Hong Kong fell because of worries about China’s economy. However, a drop in long-term U.S. Treasury yields overnight helped to keep other benchmark indexes stable.
Hong Kong saw a 0.78 percent drop, while mainland China saw a 0.36 percent drop.China’s blue chips dragged down MSCI’s broadest index of Asia-Pacific shares outside Japan by 0.22 percent.
However, Australian and South Korean equity benchmarks rose, while Japan’s Nikkei gained 0.81 percent. Nasdaq futures rose 0.6 percent, while S&P500 futures rose 0.4 percent.
The 10-year yield was last at 2.8455 percent, a smidgeon higher in Asian morning trade but still down from a high of 2.981 percent in early Wednesday trade.
“I believe we are still on track to reach 3% for 10-year treasuries; I believe there was some profit taking,” said Rob Carnell, ING’s Asia Pacific head of research.
Carnell noted that the drop in bond yields may have aided equity markets overnight, with the S&P500 remaining broadly flat on the day despite a bleak outlook for technology.
Also, he said that “equity futures look good, with Asian markets also showing some signs of near-term risk-taking,”
The Nasdaq, which is dominated by technology, fell 1.22 percent, dragged down by Netflix, which fell 35.1 percent after reporting a surprise decline in subscriber numbers. The Dow Jones Industrial Average increased by 0.71 percent.
China was once again a focal point for investors, after the government surprised markets on Wednesday by maintaining benchmark lending rates unchanged, despite repeated government pledges to support a slowing economy hit by the worst COVID-19 outbreak in two years.
However, China’s central bank set the yuan’s midpoint rate at its lowest level since November on Wednesday, ahead of the lending rate announcement. It also lowered it further on Thursday.
“The CNY fixing reflected an admission that things are not going swimmingly in China and that they require some additional support, but have been delaying doing so through interest rates. They do not wish to drive the yuan any weaker than they wish, but they have decided to reclaim some of its recent strength “Carnell stated.
The dollar fell as yields fell, with the dollar index falling 0.65% on Wednesday as the battered euro and sterling gained ground.FRX
The dollar index was last trading at 100.44, down from a near two-year high of 101.03 the previous day.
The dollar rose 0.38 percent against the yen to 128.3 in early Thursday trading, as the yen’s recovery on Wednesday – its first session of gains against the dollar in nearly two weeks-proved fleeting.
The yen has been harmed as the Bank of Japan has kept yields low while rates in the United States have risen.
Sanjaya Panth, deputy director of the International Monetary Fund’s Asia and Pacific Department, told Reuters late Wednesday that Japan did not need to alter its course.
“The yen’s recent declines are due to fundamentals and present no reason for Japan to alter its economic policies, including its central bank’s ultra-low interest rates,” Panth said.
After a mixed few days, oil prices rose again in early trade on Thursday, with Brent crude futures up 0.67 percent to $107.48 a barrel and US crude up 0.54 percent.
Investors are weighing potential supply disruptions against demand prospects, according to ANZ analysts.
The IMF’s downgrade of global growth as a result of the Ukrainian crisis casts doubt on oil demand prospects… On the other hand, Europe is under increasing pressure to sanction Russian oil. “
The spot price of gold fell 0.14 percent to $1,954.7 per ounce.