Tuesday, 19 May, 2015

Asian Shares Advance as Bonds Extend Global Slide; Wheat Climbs

(Bloomberg) — Asian shares rose, led by Chinese equities, while bonds in the region tracked a resumption of selling in international markets. New Zealand’s dollar jumped on increased inflation expectations, and silver retreated. The MSCI Asia Pacific Index climbed 0.3 percent by 2:16 p.m. in Tokyo, with a measure of Chinese companies in Hong Kong jumping 2.1 percent. U.S. equity-index futures were higher after the Standard & Poor’s 500 Index and Dow Jones Industrial Average set fresh records. Bond yields rose from New Zealand to Japan and South Korea after 10-year Treasury rates climbed nine basis points. The kiwi jumped 0.6 percent, while silver slumped after a five-day rally. Investors are rebelling after a wave of central bank stimulus pushed global sovereign-bond rates to record lows, with Australian yields rising Tuesday even after the Reserve Bank indicated it still has room to ease policy. Traders will assess U.S. housing data and minutes of the Federal Reserve’s April meeting this week for clues as to the timing of the first interest-rate increase since 2006. Greek leaders said a deal to unlock bailout funds is in reach. “Patchy U.S. data means that the Fed is highly unlikely to begin its policy normalization process until late in the December quarter,” Matthew Sherwood, Sydney-based head of investment strategy at Perpetual Ltd., which manages about $21 billion, said in an e-mail. “The Fed could not possibly be convinced that the economy is on the right track until growth is above 3 percent for two consecutive quarters.” Hong Kong The MSCI Asia Pacific Index rose as a rebound by the dollar improved the outlook for the region’s exporters. The Topix index advanced 0.6 percent in Tokyo, while South Korea’s Kospi index climbed 0.5 percent. Hong Kong’s Hang Seng Index added 0.4 percent, while just two of 40 companies in the Hang Seng China Enterprises Index retreated Tuesday. The Shanghai Composite Index increased 2.8 percent on volume that was about 20 percent below the 30-day average for the time of day. Australia’s S&P/ASX 200 Index slipped 0.5 percent. BHP Billiton Ltd., the ASX’s third-biggest stock by weighting and the world’s largest mining company, fell 1.6 percent. Chinese prices for iron ore, Australia’s chief export, slipped a fifth straight day Monday, losing 1.1 percent to $60.65 a dry metric ton, the lowest level since May 7, according to Metal Bulletin Ltd. West Texas Intermediate crude was little changed at $59.50 a barrel after slipping more than 2 percent the past four days amid concern a recovery in prices will encourage producers to boost output amid ongoing fears of a global glut. Government Notes Japan’s 10-year bond yield climbed 1 1/2 basis points to 0.39 percent, while the rate on similar Australian notes surged eight basis points to 2.95 percent. The benchmark Treasury 10-year yield was little changed at 2.23 percent. German bunds due in a decade paid 0.65 percent at the end of Monday trading, a gain of two basis points. Developed-market sovereign bonds globally have fallen 0.4 percent in the past three months, with Treasuries sliding 0.5 percent, based on the Bloomberg World Bond Indexes. “Investors are reluctant to add exposure in the government bond market,” said Hajime Nagata, who invests in Treasuries for Tokyo-based Diam Co., which oversees the equivalent of $145 billion. “Corporate bonds are offering higher yields.” Dollar Index The Bloomberg dollar index, a gauge of the greenback versus 10 major peers, was little changed. The measure rallied 0.9 percent Monday, snapping a four-day slump. The Australian dollar was little changed after the Reserve Bank of Australia said the lack of guidance at its meeting this month doesn’t limit the scope for further rate moves. The euro was little changed at $1.1311. Greek Finance Minister Yanis Varoufakis said in an interview late Monday with Greece’s Star TV Channel that the country is “very close” to a deal with creditors. New Zealand’s currency swung from a 0.4 percent drop to a gain of as much as 0.6 percent after data showing 12-month inflation expectations jumped to 1.32 percent. The Malaysian ringgit and Korean won dropped at least 0.4 percent. Silver for immediate delivery slid to $17.5420 an ounce. The metal capped its longest rising streak since June on Monday, having advanced 8.7 percent in five days. Gold for immediate delivery snapped a five-day rally, falling 0.3 percent to $1,222.16 an ounce. Gold prices are trapped in the tightest trading range in two years, according to data compiled by Bloomberg through the end of last week. That’s historically a sign of more volatility to come. When similar periods of calm blanketed the market, the metal swung 3.3 percent on average in the five days after breaking out of the band, almost twice the usual weekly change. Archr LLP is Authorised and regulated by the Financial Conduct Authority (FCA reference 617163). Archr LLP is not covered by the Financial Services Compensation Scheme (FSCS). Archr is registered in England and Wales No. OC371018. Registered office Chancery House, 30 St Johns Road, Woking, Surrey, GU21 7SA This message may contain confidential or privileged information. If you are not the intended recipient, please advise us immediately and delete this message. The unauthorised use, disclosure, distribution and/or copying of this e-mail or any information it contains is prohibited. 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