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Fixed income markets climbed in Asia trading on Tuesday as stocks in the region dipped and oil prices mounted a recovery after tumbling on Monday.
Bond yields, which move inversely to price, fell across the board on Tuesday morning as investors sought refuge from battered stock markets.
The yield on 10-year Australian government bonds down 8 basis points to 2.677 per cent, while the yield on its New Zealand cousin was down by the same amount at 3.286 per cent.
The yield on 10-year Japanese government notes was down 1bp at 0.085 per cent, while that on 10-year US Treasuries dropped by the same amount to 2.395 per cent. The yield on 10-year South Korean sovereign bonds was down 3bp at 2.123 per cent.
Stocks were dropping across Asia after uncertainty on Wall Street saw the S&P 500 close 0.2 per cent lower on Monday while London’s FTSE 100 ended trading down by the same amount.
Japan’s broad Topix index was down 0.4 per cent in morning trading. Energy stocks fell 1.3 per cent, with shares in petroleum refiner and distributor Showa Shell Sekiyu down 3.6 per cent after the company reported annual net income on-target but booked a ¥10.7bn impairment charge due to a decline in profitability. The price-focused Nikkei 225 was down 0.4 per cent.
Australia’s S&P/ASX 200 index was off 0.3 per cent, led lower by a 1.2 per cent drop in financial stocks. Shares in Macquarie Group tumbled 2.5 per cent after the investment bank left earnings guidance for 2017 unchanged due to mixed performance at its business units.
In Hong Kong the Hang Seng index was off 0.3 per cent. Chinese markets pared early losses, with the Shanghai Composite and Shenzhen Composite indices both down 0.1 per cent.
The dollar notched gains against a number of regional currencies, but the dollar index tracking the currency against a basket of peers struggled to stay above the 100-point mark after closing below it on Monday.
South Korea’s won shed 0.4 per cent against the greenback to Won1,141.26 per dollar. Japan’s yen was flat against the dollar at ¥111.79 today trading after strengthening for a third straight day on Monday by 0.8 per cent.
The Australian dollar was 0.1 per cent weaker at $0.7654. The New Zealand dollar was up 0.6 per cent at $0.7366 as data showed inflation expectations for the March quarter were up strongly from the December quarter. This helped reverse an an early dip after central bank governor Graeme Wheeler announced he would not seek a second term and would step down when his current term ends in September.
Oil prices were recovering in Asian trading after concerns over more aggressive pumping by US drillers pushed crude prices down on Monday. Brent crude, the international benchmark, was up 0.3 per cent at $55.90 per barrel after falling 1.9 per cent on Monday. West Texas Intermediate, the American marker, was up by the same amount at $53.17 per barrel after dropping 1.5 per cent the previous day.
Market tumult did little to bolster the price of gold, which fell 0.2 per cent to $1,232.77 per ounce.