Asian equities flat as yields fall

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Asian equities flat as yields fall

Man wearing a protective mask, during the coronaviruses outbreak COVID - 19 outbreak, walks past an electronic board outside a brokerage in Tokyo.

The broadest index of Asia-Pacific shares outside Japan was 0.22% lower due to a 0.78% drop for Hong Kong and 0.36% decline for blue chips in mainland China.

Nasdaq futures gained 0.6% and S&P 500 futures advanced 0.4%.

The 10 year yield was at 2.8455% last week, a whisker higher in Asia morning trade, but still bruised after falling overnight from as high as 2.981% in early trade on Wednesday.

Rob Carnell, head of research for Asia Pacific at ING, said "I think we're still heading towards 3% for 10 year treasuries, I think it was a little bit of profit taking."

Carnell said that the fall in bond yields may have provided some support for the equities overnight, with the S&P 500 generally flat on the day despite an uglier picture for tech.

He said that equity futures look positive, with Asian markets showing signs of positive risk appetite for the near term. The Dow was up 0.71%. After surprising markets on Wednesday by keeping benchmark lending rates unchanged, despite government pledges to support a slowing economy hit by its worst COVID 19 outbreak in two years, N China was a focus for investors again.

The central bank of China has set the midpoint rate for the yuan at its lowest since November on Wednesday, ahead of the lending rate announcement. It set it lower on Thursday.

The CNY fixing reflected an admission that things aren't going great in China, and they need more support, but they have been holding off from doing that with interest rates. They don't want to drive the yuan much weaker than they want it to be, but they've decided to take back some recent strength, said Carnell.

Lower yields sent the dollar lower, with the dollar index falling by 0.65% on Wednesday as the euro and sterling recovered some ground. The dollar index of FRX was down from a two-year high the previous day of 101.03.

The dollar's recovery on Wednesday - its first session of gains against the dollar in nearly two weeks - proved short-lived, as it gained 0.38% on the yen to 128.3 in early trading on Thursday.

The yen has been hurt by the Bank of Japan's low yields and rising rates in the United States.

Sanjaya Panth, the deputy director of the IMF's Asia and Pacific Department, told Reuters late on Wednesday that Japan had no need to change course.

The yen's recent declines have been driven by fundamentals and would be no reason for Japan to change its policy, including the central bank's ultra-low interest rates, Panth said.

After a mixed few days, oil climbed again in early trade on Thursday, with Brent crude futures up 0.67% to $107.48 a barrel and U.S. crude up 0.54%.

ANZ investors were weighing potential supply disruptions against demand prospects, according to analysts.

The Ukrainian crisis has hurt the global growth of the International Monetary Fund as well as its global growth downgrade due to the global growth downgrade. On the other hand, pressure is mounting on Europe to impose sanctions on Russian oil.