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Asian Markets Slip As Bond Yields Rise

Asian stock markets are mixed on Wednesday following the lackluster cues overnight from Wall Street. There are also continuing concerns over an uptick in bond yields and worries over higher inflation affecting valuations. Asian stocks ended mixed on Tuesday.

The Australian stock market is declining following the weak cues overnight from Wall Street. Worries over higher inflation affecting valuations also weighed on the market.

The benchmark S&P/ASX 200 Index is losing 60.80 points or 0.89 percent to 6,778.40 and the broader All Ordinaries Index is lower by 60.20 points or 0.85 percent to 7,050.60. In the tech space, Appen is falling almost 2 percent, Nanosonics is down nearly 4 percent, Afterpay is lower by more than 7 percent and WiseTech Global is losing more than 3 percent.

Gold miners are higher as gold prices are firmer, with Evolution Mining adding more than 1 percent and Newcrest Mining gaining more than 4 percent.

Meanwhile, the major miners are notably higher, with BHP Group rising more than 3 percent, Fortescue Metals higher by 0.4 percent and Rio Tinto advancing nearly 2 percent.

Oil stocks are also higher, with Oil Search gaining more than 6 percent, while Woodside Petroleum and Santos are gaining nearly 6 percent each.

Among the big four banks, ANZ Banking and National Australia Bank are advancing more than 1 percent, while Commonwealth Bank and Westpac are gaining nearly 2 percent.

Shares of supermarket retailer Woolworths are up more than a percent after it reported a 28 percent jump in net profit after tax for the first half of 2021 to A$1.14 billion from last year. Total revenue grew over 10 per cent to $38.85 billion. It also declared a 15.2 percent higher interim dividend of 53 cents per share.

In economic news, the Australian Bureau of Statistics (ABS) said that the total value of construction work done in Australia was unexpectedly down a seasonally adjusted 0.9 percent on quarter in the fourth quarter of 2020, coming in at A$51.171 billion. That missed expectations for a growth of 1.0 percent following the 2.6 percent decline in the previous three months.

Additionally, the seasonally adjusted Wage Price Index (WPI) rose 0.6 per cent in the fourth quarter 2020 and maintained the historically low annual growth rate of 1.4 per cent for a second quarter compared with market forecasts of 1.1 percent annually, according to figures released by the ABS. The latest reading remained the weakest growth on record.

The Japanese stock market is lower on Wednesday with the benchmark Nikkei 225 falling below the 30,000 level as gains in real estate stocks was offset by losses in technology stocks. However, optimism on economic recovery after the pandemic prompted fresh buying in value and cyclical stocks. The benchmark Nikkei 225 Index is declining 232.21 points or 0.77 percent to 29,923.82, after touching a low of 29,846.17 in early trades.

Market heavyweight SoftBank Group is declining more than 2 percent while Uniqlo operator Fast Retailing is up 0.4 percent. Among automakers, Honda is adding almost 1 percent, while Toyota is down 0.2 percent.

In the tech space, Tokyo Electron is lower by more than 2 percent and Advantest is down nearly 3 percent. In the banking sector, Sumitomo Mitsui Financial is adding 1.2 percent and Mitsubishi UFJ Financial is gaining 1.4 percent.

Among major exporters, Panasonic is declining almost 1 percent, Sony is losing nearly 3 percent and Mitsubishi Electric is down more than 1 percent, while Canon is edging up 0.5 percent.

Among the other major gainers, Yokohama Rubber is gaining almost 9 percent, Pacific Metals is adding nearly 8 percent, Sumitomo Metal Mining is up over 7 percent and Shinsei Bank is gaining 6 percent, while Mitsui Mining and Smelting, Fujikura, ANA Holdings, Mitsui OSKLines and DOWA are rising more than 5 percent each.

Conversely, Olympus is losing nearly 5 percent, while Konica Minolta and Terumo are lower by more than 4 percent each and Daikin Industries in down nearly 4 percent.

In the currency market, the U.S. dollar is trading in the lower 105 yen-range on Wednesday.

Elsewhere in Asia, Hong Kong is declining more than 1 percent, while China, Singapore, New Zealand and Taiwan are also lower. Singapore is rising more than 1 percent, while Malaysia and Indonesia are also higher. On Wall Street, stocks showed a substantial recovery over the course of the trading day on Tuesday after moving sharply lower early in the session. The major averages climbed well off their early lows, with the Dow and the S&P 500 reaching positive territory. The Dow plunged by more than 360 points in early trading but ended the day up 15.66 points or 0.1 percent at 31,537.35. The S&P 500 also inched up 4.87 points or 0.1 percent to 3,881.37 after tumbling by as much as 71 points. Meanwhile, the tech-heavy Nasdaq finished the session down 67.85 points or 0.5 percent at 13,465.20 but was well off the nearly one-month intraday low set in early trading.

The major European markets also finished the day mixed. While the German DAX Index fell by 0.6 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index both inched up by 0.2 percent.

Crude oil prices ended slightly lower on Tuesday after surging in the previous session. West Texas Intermediate Crude oil futures for April ended down $0.03 at $61.67 a barrel.

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Danish Retail Sales Decline At Softer Pace

Denmark retail sales declined for the third month in a row in January, albeit at a softer pace, figures from the Statistics Denmark showed on Wednesday.

Retail sales declined a seasonally adjusted 5.0 percent month-on-month in January, following a 8.3 percent decrease in December.

Sales of clothing and other goods decreased 43.3 percent monthly in January and those of other consumables decreased 7.1 percent.

Meanwhile, sales of food and grocery grew 2.8 percent.

On an annual basis, retail sales dropped 7.6 percent in January, after a 1.3 percent gain in the previous month.

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German Q4 GDP Grows More Than Estimated

The German economy grew more than initially estimated in the fourth quarter, revised data from Destatis showed on Wednesday.

Gross domestic product grew 0.3 percent sequentially in the fourth quarter instead of 0.1 percent estimated previously. However, this was much slower than the 8.5 percent rebound seen in the third quarter.

On a yearly basis, the decline in GDP slowed to 3.7 percent from 4 percent. The fourth quarter rate was revised from -3.9 percent.

The price-adjusted GDP dropped by revised 2.7 percent annually after easing 3.9 percent in the third quarter. According to flash estimate, GDP was down 2.9 percent in the fourth quarter.

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Mixed Open Seen in European Markets

European stocks are seen opening on a mixed note Wednesday after Federal Reserve Chairman Jerome Powell’s remarks to U.S. lawmakers contained no surprises.

Powell will have another opportunity to address several issues such as interest rates, job losses and stimulus during his second day of testimony in Congress later today.

Asian markets are moving lower as reflation fears persisted and Iran rejected direct negotiations with the U.S. on the nuclear deal as long as American sanctions remain in place.

Chinese and Hong Kong stocks led regional losses as U.S. President Joe Biden showed readiness to meddle the Canadian citizens’ evacuation from Beijing.

There is some positive news on the vaccine front, with two separate studies published in the U.K. revealing that vaccines against Covid-19 are effective in cutting disease transmission and hospitalizations from the first dose.

The dollar hovered near a three-year low against the British pound while oil prices fell after industry data showed U.S. crude inventories unexpectedly rose last week.

Revised quarterly national accounts from Germany and business sentiment figures from France are due later in the session, headlining a light day for the European economic news.

Across the Atlantic, Powell’s second day of testimony may attract some attention along with a report on new home sales in the month of January.

U.S. stocks pared earlier losses to end mixed overnight as investors cheered reassuring comments from Powell on inflation and interest rates.

Powell reiterated interest rates will remain at near-zero levels and the Fed will continue its asset purchases at the current rate until “substantial further progress” has been made toward its goals of maximum employment and price stability.

The Dow Jones Industrial Average and the S&P 500 edged up around 0.1 percent, while the tech-heavy Nasdaq Composite slipped half a percent.

European markets closed mostly lower on Tuesday after a choppy session on concerns over rising bond yields.

The pan European Stoxx 600 eased 0.4 percent. The German DAX dropped 0.6 percent, while France’s CAC 40 index and the U.K.’s FTSE 100 both inched up 0.2 percent.

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Hong Kong Govt To Spend HK$120 Bln To Stimulate Economy

The Hong Kong government plans to spend HK$120 billion to alleviate the hardship and pressure caused by the coronavirus pandemic, Financial Secretary Paul Chan said in his 2021-22 budget speech on Wednesday.

The economy shrank 6.1 percent in 2020, which was the largest annual fall on record and also the first time for Hong Kong to log two consecutive years of contraction.

Taking into account the internal and external situations as well as the stimulus effect of the fiscal measures, the economy is projected to grow by 3.5 percent to 5.5 percent this year.

The economy will grow by an average of 3.3 percent per annum in real terms from 2022 to 2025, while the underlying inflation rate will average 2 percent, Chan said.

After two consecutive years of contraction, overall economic activities will remain below the pre-recession level this year and should not pose notable pressure on local costs, he noted. Inflation and the underlying inflation will be 1.6 percent and 1 percent, respectively this year.

In order to stimulate local consumption, the government will issue vouchers worth HK$5000 to each residents.

The government has allocated HK$9.5 billion to support enterprises. Chan reduced profits tax for the assessment year 2020-21 by 100 percent and provided rates concession for non-domestic properties for four quarters of 2021-22.

Further, business registration fees for 2021-22 were waived, which is likely to benefit 1.5 million business operators.

The government has introduced a number of enhancements to the SME Financing Guarantee Scheme.

In 2020-21, the government created about 31,000 time-limited jobs in the public and private sectors. Chan proposed to further allocate HK$6.6 billion to create around 30,000 time-limited jobs for a period up to 12 months.

He raised the stamp duty on stock transfers to 0.13 percent from the current 0.1 percent.

Chan said that the fiscal deficit will be HK$101.6 billion next fiscal year, accounting for 3.6 percent of GDP, due to the counter-cyclical fiscal measures. The operating deficit for 2021-22 will be more than HK$140 billion, he added.