Asian Stocks Fluctuate on China Data, Bond Sale: Markets Wrap

(Bloomberg) — Asian stocks swung between gains and losses with sentiment influenced by poor Chinese data and optimism over reports the country will start selling ultra-long bonds.

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Hong Kong’s equity benchmark climbed to the highest since August, while mainland-listed shares were mostly lower. Japanese and Australian equity indexes both fell. China’s 1 trillion yuan ($138 billion) ultra-long special bond issuance program will began Friday and eventually include 20-, 30- and 50-year debt, according to people familiar with the matter.

News of the planned debt issuance boosted sentiment after weak Chinese data published over the weekend had led to initial stock losses. The specter of further US-China trade tensions also intensified with a report on how much President Biden is set to increase tariffs on Chinese electric vehicles.

“You are looking at a slightly muddied growth outlook” for China, Sonal Desai, chief investment officer at Franklin Templeton said in an interview on Bloomberg Television before news of the debt sale was published. Regardless of who gets elected in the US election in November, we are going to see an escalation of US-China trade tensions, he said.

Bloomberg’s dollar index and benchmark 10-year Treasuries were both little changed. Japanese bonds fell after the central bank offered to purchase a smaller amount of government debt than at a previous auction.

Investors are scrutinizing comments by US officials for signs of how long the Federal Reserve will keep interest rates at elevated levels. Fed Bank of Dallas President Lorie Logan said last week it’s still too early to think about lowering borrowing costs, while Governor Michelle Bowman said she doesn’t expect it will be appropriate for the Fed to cut rates in 2024.

Potential major catalysts for markets this week include a policy rate decision from China on Wednesday and a US April inflation print the same day.

“There is growing confidence in the Chinese market, even though the economic indicators do not fully support this optimism,” said Tareck Horchani, head of prime brokerage dealing at Maybank Securities Pte. “The movement seems to be driven more by technical factors than fundamental ones.”

Read more: High-Risk Options Bet on Bond Rally at Risk of Losing Millions

The weak Chinese data weighed on oil Monday, with commodity traders also looking ahead to an OPEC+ meeting on supply policy.

Iraqi Oil Minister Hayyan Abdul Ghani initially said at the weekend that Baghdad had cut production enough and wouldn’t agree to more. But later, he said that any decision was a matter for OPEC, and it would stick to whatever the group decided. OPEC+ meets June 1.

Elsewhere this week, the euro area is set to report inflation and growth figures while a swath of Federal Reserve officials are due to speak including Chair Jerome Powell.

US and European stock futures were little changed.

Some key events this week:

Australia business confidence, Monday
New Zealand food prices, inflation expectations, Monday
India trade, CPI, Monday
Euro-area finance ministers meet in Brussels, Monday
Australia 2024-25 budget, Tuesday
Japan PPI, Tuesday
Germany CPI, ZEW survey expectations, Tuesday
UK jobless claims, unemployment, Tuesday
US PPI, Tuesday
Fed Chair Jerome Powell and ECB Governing Council member Klaas Knot speak, Tuesday
China rate decision, Wednesday
Eurozone industrial production, GDP, Wednesday
US CPI, retail sales, business inventories, empire manufacturing, Wednesday
Australia unemployment, Thursday
Japan GDP, industrial production, Thursday
China property prices, retail sales, industrial production, Friday
Eurozone CPI, Friday