Asian Stocks Mostly Up, but Investors Keep Wary Eye on Chinese Markets

By Gina Lee

Investing.com – Asia Pacific stocks were mostly up Wednesday morning, continuing gains made during the previous session after Nasdaq 100 recorded its biggest gains since November 2020.

China’s Shanghai Composite jumped 0.80% by 10:11 PM ET (3:11 AM GMT) and the Shenzhen Component gained 0.63%. Inflation data released earlier in the day showed that February’s Consumer Price Index (CPI) grew 0.6% month-on-month while contracting 0.2% year-on-year. February’s Producer Price Index grew 1.7% year-on-year.

The focus on China continued after shares slumped on Tuesday, with state efforts to curb losses unsuccessful and the benchmark Shanghai Composite index standing on the brink of a correction. Investors also digested the prospect of tighter policy and slowing economic recovery.

Hong Kong’s Hang Seng Index rose 0.73%.

Japan’s Nikkei 225 was up 0.28% and South Korea’s KOSPI was up 0.31%.

In Australia, the ASX 200 was down 0.21%.

Nasdaq 100’s climb upwards cut the earlier rotation into value shares, after the U.S. House of Representatives voted to take up a $1.9 trillion stimulus package bill on Tuesday and COVID-19 vaccine rollouts continue.

The vote clears the way for the chamber to consider the bill on Wednesday, where it is expected to pass. With the Senate already passing the bill earlier in the week, the bill is expected to become law by the end of the week.

Treasury yields continued to be a point of focus, as they hovered below recent peaks after the first batch of auctions earlier in the week went smoothly. This pullback in yields allowed risk-takers to turn back towards growth stocks, which have recently taken a hit due to valuation concerns.

Yields have been climbing along with economic growth expectations, New York Life Investment portfolio strategist Lauren Goodwin told Bloomberg. That backdrop still favors cyclicals over defensive assets and “supports equities over bonds, and a weaker U.S. dollar,” she added.

An upcoming auction of ten and 30-year bonds will test investor appetite for the safest debt after February’s poorly bid seven-year auction drove yields higher and adversely impacted risk assets globally.

In Australia, bond yields also continued a move downward after Reserve Bank of Australia governor Philip Lowe suggested earlier in the day that markets may be getting ahead of themselves by pricing in an earlier interest-rate increase.

In Europe, the European Central Bank will hand down its monetary policy on Thursday. The U.S. also releases its core CPI for February later in the day.

On the cryptocurrency side, Bitcoin traded around $55,000.

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