(Bloomberg) — Asian stocks regained early losses as reports of China's plan to sell super-long bonds increased optimism that the proceeds would boost the economy.
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Hong Kong's stock benchmarks rose to their highest since August on the news, while mainland listed stocks narrowed their losses. China's 1 trillion yuan ($138 billion) super-long-term special bond issuance program will begin on Friday and will eventually include 20-year, 30-year and 50-year bonds, the people said.
Weak Chinese economic data released over the weekend led to an initial drop in stocks, but news of the bond issuance plan has boosted sentiment for regional stocks. Reports about how much President Biden plans to raise tariffs on Chinese-made electric vehicles have also fueled speculation that trade tensions between the United States and China will escalate further.
Sonal Desai, chief investment officer at Franklin Templeton, said in an interview on Bloomberg TV before news of the bond sale broke that China's “growth outlook is a little cloudy.” He said U.S.-China trade tensions will intensify regardless of who is elected in the U.S. presidential election in November.
The Bloomberg Dollar Index and the benchmark 10-year U.S. Treasury bond were both little changed. Japanese government bonds fell after the central bank proposed buying a smaller amount of government bonds than in the previous auction.
Investors are scrutinizing comments from U.S. officials for signs of how long the Federal Reserve will keep interest rates high. Dallas Fed President Laurie Logan said last week that it was too early to consider lowering borrowing costs, and President Michelle Bowman said it would not be appropriate for the Fed to cut interest rates in 2024.
The main potential triggers for markets this week include China's interest rate decision on Wednesday and the US' April inflation data on the same day.
“While economic indicators do not fully support this optimism, confidence in the Chinese market is growing,” said Tarek Horchani, head of prime brokerage dealing at Maybank Securities. . “This movement appears to be driven more by technical factors than fundamental factors.”
Read more: High-risk options to bet on a bond rally with the risk of losing millions
Weak Chinese economic data weighed on oil on Monday, as commodity traders also prepare for an OPEC+ meeting on supply policy.
Iraq's Oil Minister Hayyan Abdul Ghani initially said over the weekend that Baghdad had made enough production cuts and would not agree to more. But he later said any decision was a matter for OPEC and that he would abide by whatever OPEC decided. OPEC+ will meet on June 1st.
Elsewhere this week, the euro zone is scheduled to release inflation and growth figures, and a number of Federal Reserve officials, including Chairman Jerome Powell, are scheduled to speak.
U.S. and European stock futures were little changed.
This week's main events:
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Australian business confidence on Monday
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New Zealand food prices, inflation expectations, Monday
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India Trade, CPI, Monday
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Eurozone finance ministers meet in Brussels on Monday
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Australia 2024-25 Budget, Tuesday
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Japan PPI, Tuesday
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German CPI, ZEW survey forecast, Tuesday
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UK unemployment insurance claims, unemployment rate, Tuesday
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US PPI, Tuesday
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Fed Chairman Jerome Powell and ECB Governing Council member Claes Knott speak on Tuesday
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China interest rate decision 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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Australian unemployment rate Thursday
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Japan's GDP, industrial production, Thursday
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China real estate prices, retail sales, industrial production, Friday
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Eurozone CPI, Friday
stock
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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 (OSE) fell 0.1%
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Japan's Topix remains almost unchanged.
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Australia's S&P/ASX 200 falls 0.3%
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Hong Kong's Hang Seng rose 0.4%
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The Shanghai Composite fell 0.3%.
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Euro Stoxx50 futures little changed
currency
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Bloomberg Dollar Spot Index little changed
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The euro was almost unchanged at $1.0770.
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The Japanese yen remained almost unchanged at 155.80 yen to the dollar.
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The offshore yuan was almost unchanged at 7.2397 yuan to the dollar.
cryptocurrency
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Bitcoin fell 0.8% to $60,812.87.
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Ether fell 1.8% to $2,870.18.
bond
merchandise
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West Texas Intermediate crude oil fell 0.2% to $78.07 a barrel.
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Spot gold fell 0.2% to $2,356.90 an ounce.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Ishika Mookerjee.
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