Stocks Advance; Yuan Slides to Lowest in a Year: Markets Wrap

Bloomberg.com — Stocks in Asia climbed Tuesday on further signs of a shift by China toward monetary expansion and as rising yields boosted financial shares. The yuan tumbled to the lowest against the dollar in more than a year.

Equities gained across the region, with the steepest advances among Chinese stocks after the government unveiled a package of measures to boost domestic demand amid simmering trade tensions. The yuan slid as much as 0.6 percent a day after a record injection of funding for banks. China’s benchmark 10-year bond yield jumped to a four-week high.

Financial stocks as a group were among the biggest gainers on the MSCI Asia Pacific Index on rising bond yields and European equity futures gained in early London trading. Ten-year Treasury yields held around the highest in more than a month after speculation arose that the Bank of Japan may consider fine-tuning its stimulus programs — reminding traders that the direction of major central banks is toward rolling back quantitative easing.

The slide in the yuan has renewed investor focus on the role the currency could play in the country’s ongoing trade tensions with Washington. A Chinese Foreign Ministry spokesman said Monday the yuan is “determined by the market,” after the Trump administration criticized the recent weakening in the exchange rate.

“We think it’s counterproductive for China and others to try and use currency actively as a tool in a trade war,” Johan Jooste, chief investment officer at Bank of Singapore, said in a Bloomberg Television interview. “In the short run, they are probably quite happy to allow some depreciation to occur — it might soften the blow — but longer term what you will have is a series of competitive devaluations and you are back to where you started.”

Elsehwere, Google parent Alphabet — a target of European regulators’ ire — saw its shares climb in after-market trading, after reporting rising revenue from advertising. Crude oil held below $68 a barrel in New York and gold declined.