Stocks in Asia climb, Dollar extends its advance
Stocks in Asia rose and the dollar extended its recent run, while investors maintained focus on the U.S. Treasury market, where the 10-year note flirted with 3%.
The greenback added to overnight gains, with the 10-year Treasury yield remaining just below its highest level since 2014. As the yen retreated, equities in Japan climbed, with indexes in Hong Kong and Australia also higher. South Korean shares fell as SK Hynix Inc. continued a pattern seen from a string of semiconductor makers where earnings disappointed investors. United Co. Rusal surged more than 30% in Hong Kong trading after the U.S. softened its position on sanctions against the aluminum producer.
“For us it’s more the reasons why we’re seeing the move: better growth outlook, a little bit more inflation and faster rate hikes being priced in by the market,” Kerry Craig, Melbourne-based global market strategist at JPMorgan Asset Management, told Bloomberg TV. “It should be reaffirming the fact that we see a global economy that’s looking relatively healthy.”
Investors are questioning the implications of rising bond yields that were in part spurred by higher commodity prices and concern surrounding their inflationary effect on the wider economy. Volatility in interest-rate markets remains low and equity volatility is well off the highs from earlier this year, indicating investors believe rising borrowing costs may not be enough to derail further stock gains for now.
Technology remains under pressure with the Philadelphia Semiconductor Index now down more than 7% over the past four days. Weaker earnings report — this time from $8.3 billion European manufacturer ams AG as well as SK Hynix — kept last week’s slide going after a string of earlier disappointments.
Elsewhere, aluminum slumped the most since 2005 after the Treasury Department signaled it may lift Rusal sanctions if Oleg Deripaska divests control.