Asian equities edged higher on Wednesday, with risk appetite contained by elevated bond yields as investors remained nervous about the fiscal outlook of major developed economies and the lack of progress on fresh trade deals.
Crude prices rose more than $1 a barrel after a CNN report said that Israel was preparing a strike on Iranian nuclear facilities, raising supply concerns out of the key Middle East producing region and bringing geopolitical concerns back into focus.
All eyes are also on the Japanese bond markets, a day after yields on super-long tenors surged to record highs on worries about demand for the country’s debt after a weak 20-year auction. JP/
In early trading on Wednesday, the yield on 20-year bonds edged up 2 basis points, while those on the 30-year JGB slipped 1.5 bps.
In stocks, China’s blue-chip index was muted in early trading, while Hong Kong’s Hang Seng Index rose 0.58 percent.
China said it could take legal action against any individual or organization assisting or implementing US measures that advise companies against using advanced semiconductors from China.
The MSCI’s broadest index of Asia-Pacific shares outside Japan crept up 0.5 percent, while Japan’s Nikkei was down 0.18 percent.
“The markets are hungry for new catalysts to pique further risk appetite,” said Kyle Rodda, senior financial market analyst at Capital.com.
“The US’s backflip on trade policy and the damage control that it went into to clean up the mess it created with the Liberation Day tariffs signals a determination to get all of this done. That’s what is keeping equity valuations well supported.”
Data on Wednesday showed Japanese shipments to the US fell in April even as exports rose for the seventh straight month, highlighting the toll President Donald Trump’s tariffs could take on the fragile economic recovery in Japan.
