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Asian stocks and bonds hit by global debt rout

Friday 03.40

Overview

Asian equities followed Wall Street lower on Friday as Australian government bonds joined a global bond rout.

Hot topic

The rise in sovereign debt yields hit Asia Pacific after the yield on the 10-year German Bund rose to an 18-month high on Thursday as investors continue to expect the European Central Bank will withdraw monetary stimulus.

The yield on 10-year Treasury, which moves inversely to its price, rose 5 basis points to 2.373 per cent

The yield on Australian 10-year government bonds rose 6.4bp to 2.701 per cent. That for Japanese government bonds fell 0.3 per cent to 0.085 after the Bank of Japan increased purchases of 10-year sovereign notes.

Equities

Australia’s S&P/ASX 200 was down 1.3 per cent as the financial sector was off 1.5 per cent. Coca-Cola Amatil was the worst performer on the index falling as much as 6.5 per cent as analysts digested Domino’s Pizza Enterprises’ decision to partner with Coke rival Schweppes Australia for its drinks.

Japan’s Topix index was down 0.2 per cent as the industrials sector fell 0.1 per cent and the consumer staples segment lost 0.3 per cent.

Hong Kong’s Hang Seng shed 0.3 per cent as the information technology sector fell 0.9 per cent. Cosco Shipping jumped as much as 14.2 per cent after the company said it estimated net profit for the six months to June would rise to Rmb1.85bn ($272m), from a Rmb7.2bn loss in the same period in 2016. The Shanghai Composite was down 0.5 per cent while the Shenzhen Composite slipped 0.3 per cent.

Forex

The dollar index, a measure of the US currency against a basket of peers, was 0.2 per cent stronger at 95.955.

The Japanese yen weakened 0.5 per cent against the dollar to ¥113.78 after the Bank of Japan increased purchases of Japanese government bonds.

The euro was 0.1 per cent lower against the dollar at $1.1409 after strengthening 0.6 per cent on Thursday.

Commodities

Oil prices fell despite data from the Energy Information Administration showing US crude and gasoline inventories fell sharply last week. Crude stocks fell 6.3m barrels, the largest dip in a month and gasoline inventories fell 3.7m barrels.

International benchmark Brent crude was off 1.3 per cent at $47.47 a barrel. West Texas Intermediate, the main US contract, was down by the same amount at $44.91 a barrel.

Gold was down 0.4 per cent at $1,220.11 an ounce.

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