World|business|July 24, 2018 / 12:00 PM
Bonds fear fading stimulus, China shares at one-month top

AKIPRESS.COM - Global bond markets were tense on Tuesday amid talk of central bank tightening and the risk of a robust reading on U.S. economic growth later in the week, though stellar results from internet giant Alphabet supported tech stocks in Asia, Reuters reports.

Shares in the parent of Google climbed 3.6 percent after hours to hit a record high, valuing the group at a cool $870 billion.

That made up for an otherwise dull day on Wall Street where the Dow eased 0.06 percent, while the S&P 500 gained 0.18 percent and the Nasdaq 0.28 percent.

In Asia, Shanghai shares seemed to get a boost from news Beijing would adopt a more “vigorous” fiscal policy, including company tax cuts.

Chinese blue chips rose 1.6 percent to a one-month high, while MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.47 percent.

Japan’s Nikkei edged up 0.5 percent even as a disappointing reading on local factory activity suggested the threat of a trade war was starting to bite.

Bond bulls were still smarting from speculation that the Bank of Japan is close to announcing measures to scale back its massive monetary stimulus, a risk that lifted long-term borrowing costs globally.

Markets were worried that Japanese investors would have less incentive to hunt offshore for yield, said ANZ economist Felicity Emmett.

“The 10 basis-point steepening in the Japanese yield curve is massive in the context of a market that rarely moves more than 1 basis point,” she added.

“It reflects a broader fear that central banks are reducing their purchases while U.S. bond supply is set to rise significantly.”

As a result, 10-year U.S. Treasury yields jumped to their highest in five weeks around 2.96 percent and were again nearing the psychological 3 percent bulwark.

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