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Asian bonds and currencies gain as Yellen testimony looms

Wednesday 03:20 BST

Overview

Asian currencies and bonds were making broad gains as oil consolidated an earlier advance, with Hong Kong stocks rallied ahead of Federal Reserve chair Janet Yellen’s semi-annual testimony to Congress.

Hot topic

Equities were mixed in Asia Pacific trading as financials suffered and gold stocks rallied — though Hong Kong bucked the regional trend to continue its rally this week.

Australian gold stocks were up 0.9 per cent despite only a minor increase in the price of the precious metal as Resolute Mining reported higher-than-expected output. Resolute shares were up 3.6 per cent. The benchmark S&P/ASX 200 was down 0.8 per cent while financials shed 1.1 per cent.

In Tokyo the Topix index was off 0.3 per cent with losses across the board. The financials segment dropped 0.7 per cent with Sumitomo Mitsui Financial Group down 1 per cent.

Hong Kong’s Hang Seng Index was up 0.6 per cent, continuing a rally that has seen it gain 2.8 per cent this week, headed for the best weekly performance since mid-March. The Hang Seng China Enterprises index focused on mainland Chinese blue-chip stocks was up 1 per cent — on course for the best week in nine weeks.

Forex

Asian currencies were gaining on the US dollar. The Japanese yen was 0.3 per cent firmer at ¥113.64, surpassing the ¥114 mark, while the Australian dollar gained 0.3 per cent to $0.7653, its strongest in four days.

The renminbi pushed past the Rmb6.8 per dollar mark, firming to Rmb6.7931 after the People’s Bank of China set trading band for its currency stronger for the first time this week. That came as the Financial News, the central bank’s official newspaper, called for a widening of the trading band.

Fixed income

Sovereign bonds were faring well in Asia ahead of testimony from Fed chair Janet Yellen to Congress later on Wednesday.

The yield on the 10-year Australian government bond was down 1 basis point at 2.731 per cent, while that on the equivalent South Korean note was 2 bps lower at 2.249 per cent. Bond yields move inversely to prices.

The 10-year Japanese government bond yield was virtually flat at 0.082 per cent and that on 10-year US Treasuries was 1 bp lower at 2.353 per cent.

Commodities

Oil prices continued to rise after popping higher on Tuesday amid reports that US inventories fell last week.

Brent crude, the global benchmark, was up 1.3 per cent at $48.13 a barrel. West Texas Intermediate, the US marker, was up 1.5 per cent $45.71. Both ended the previous session up 1.4 per cent.

Gold was edging higher, up 0.1 per cent at $1,218.59 per ounce.

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