(Bloomberg) -- Asian equities edged higher Wednesday after US shares snapped a four-day losing streak, providing a moment of respite in one of the worst years for stocks and bonds in more than a decade.
The yen inched fractionally lower after its biggest one-day jump since 1998 on Tuesday, when it climbed almost 4% against the dollar on a surprise policy adjustment from the Bank of Japan.
Japan’s two-year government yield rose above zero for the first time since 2015, while 10-year Treasury yields rose slightly in Asia after jumping 10 basis points for the second consecutive session on Tuesday.
Shares advanced in Hong Kong, mainland China and Australia, along with US and European futures contracts. Japanese equities erased an initial decline, led by bank stocks on expectations that rising interest rates will boost their profitability.
The impact of the BOJ’s surprise decision to let yields on 10-year government bonds trade up to 0.5%, from a previous ceiling of 0.25%, continues to reverberate. The yield was around 0.45% on Wednesday.
Traders are on guard for the prospect of Japanese institutions repatriating money held in overseas stocks and bonds. Japanese investors have more than $3 trillion in foreign equities and debt with roughly half in the US, according to Bloomberg data.
“Tighter BOJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly,” Deutsche Bank analysts told clients, noting the change has come as markets were “already reeling” from the Fed and ECB meetings last week.
Many economists now expect the BOJ to raise interest rates next year, joining the Fed, the ECB and others after a decade of extraordinary stimulus.
Fresh data indicating a cool down in the US housing market offered some respite to the outlook for inflation in a year marked by quickly rising interest rates that weighed on stocks and bonds. Global equities have fallen by a fifth in 2022, on pace for their worst year since 2008. A Bloomberg index of global bonds has tumbled by 16%, by far the largest decline on an annual basis since the benchmark began in 1990.
Key events this week:
- US GDP, initial jobless claims, US Conf. Board leading index, Thursday
- US consumer income, new home sales, US durable goods, PCE deflator, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.6% as of 10:50 a.m. Tokyo time. The S&P 500 rose 0.1%
- Nasdaq 100 futures climbed 0.7%. The Nasdaq 100 fell 0.1%
- Japan’s Topix rose 0.2%
- Australia’s S&P/ASX 200 rose 1.3%
- Hong Kong’s Hang Seng rose 0.6%
- The Shanghai Composite rose 0.1%
- Euro Stoxx 50 futures rose 0.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0620
- The Japanese yen fell 0.3% to 132.07 per dollar
- The offshore yuan was little changed at 6.9673 per dollar
Cryptocurrencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0617
- The Japanese yen fell 0.4% to 132.24 per dollar
- The offshore yuan fell 0.1% to 6.9718 per dollar
- The Australian dollar was unchanged at $0.6678
Cryptocurrencies
- Bitcoin fell 0.2% to $16,854.42
- Ether fell 0.4% to $1,211.12
Bonds
- The yield on 10-year Treasuries advanced three basis points to 3.71%
- Japan’s 10-year yield advanced five basis points to 0.45%
- Australia’s 10-year yield advanced two basis points to 3.75%
Commodities
- West Texas Intermediate crude rose 0.3% to $76.30 a barrel
- Spot gold fell 0.1% to $1,816.10 an ounce