Asian Equities Mixed, Bond Rally as Investors Wary on Economic Measures

Asian equites are mixed while treasuries climbed as market weighing monetary tightening by central banks to tame down inflation.

Shares in Mainland China and Hong Kong dipped while South Korea and Japan trading higher moderately. The MSCI Asian Index ex Japan is higher by 0.16%.

Tech stocks in Hong Kong fell with the Nasdaq Golden Dragon China Index tumbled almost 5%. Investors worry of the measures and assurance by authorities in China to shore up the economy.

Bond market saw a sharp repricing with long bond yields falling – such as Bank of America Corp. and Nomura Asset Management said this is a buying opportunity after the recent rout. Ten-year yields trimmed a steep retreat.

“There are still some risks right now,” Ray Sharma-Ong, abrdn Multi-Asset Solutions investment director, Asia Pacific, said on Bloomberg Television as reported by Bloomberg.

“It’s not over. We do still see some risk of 10-year yields pushing higher on the back of this uncertainty,” as investors await details on the Fed’s timeline for shrinking its balance sheet.

Meanwhile, the U.S. economy grew moderately through mid-April, however rising prices and geopolitical developments poses uncertainty and dimmed outlook, the Fed said in its Beige Book survey released Wednesday.

“Strong demand allowed firms to pass through input cost increases in consumers,” Carol Kong, a strategist at Commonwealth Bank of Australia, said in a note.

“The anecdotal evidence supports our view the FOMC is well behind the curve and needs to tighten policy aggressively.”

Investors will be looking for any clues on central bankers’ thinking on rates and inflation when Fed Chair Jerome Powell and European Central Bank President Christine Lagarde discuss the global economy at an IMF event Thursday.

Crude oil markets is trading higher with WTI trading around $103 a barrel and Brent trading around $107 a barrel.