Asian stocks wary as bond yields rise

Asian stock markets opened cautiously on Monday as a surge in global bond yields posed a challenge to equity valuations, particularly for the tech sector. This week is packed with crucial central bank meetings and key economic data releases.

China’s retail sales grew by 3.0 per cent in November, below expectations. Industrial production was on target, and house prices continued to decline, but at a slower rate. This indicates a need for stronger stimulus measures.

China’s blue-chip CSI300 index eased 0.4 per cent on Monday, following a two per cent drop last Friday. Over the weekend, a Chinese central bank official signalled room for further cuts in the reserve requirement ratio.

Bitcoin surged to a record high above $106,000 in other markets, fuelled by expectations that President-elect Trump’s administration will adopt a cryptocurrency-friendly regulatory environment.

Asian markets were mixed on Monday. Japan’s Nikkei held steady, while South Korea’s KOSPI eased 0.2 per cent despite government promises of further support. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1 per cent.

The dollar has strengthened due to rising bond yields, putting pressure on emerging market currencies and forcing some countries to intervene. The dollar index stood at 106.870, after gaining 0.9 per cent last week.

Gold prices were subdued at $2,651 an ounce, while oil prices retreated from recent highs, despite expectations of tighter supply due to potential sanctions on Russia and Iran. Brent crude fell 21 cents to $74.28 a barrel, and US crude eased 32 cents to $70.97.

Attribution: Reuters

Subediting: M. S. Salama