Bond Rally Gathers Pace; Shanghai Index Down 1%: Markets Wrap

Photo: Bloomberg

(Bloomberg) — The powerful rally in sovereign bonds gathered pace on Friday, sending benchmarks to historic lows and stirring unease in equities in volatile trading.

Thirty-year Treasury yields slid below 1.5% for the first time, Chinese 10-year yields hit levels unseen since 2002 and Australian ones recorded all-time lows. An initial gain in futures on the S&P 500 Index was wiped out, signaling further losses after a tumble of over 3% on Thursday. Japanese and Korean stocks fell more than 2%. The yuan retreated, though Chinese shares continued to outperform peers.

“Investors are in a much more cautious mood than they were even a few weeks ago and not just with their short-term views, but also with their longer-term views and therefore trading plans,” said Nick Twidale, general manager of IC Markets in Sydney.

Global stocks are still up more than 2% for the week, helped by a concerted move by global central banks and fiscal authorities to address the rapidly mounting economic damage from the coronavirus. They remain about 10% below the all-time high reached last month.

Elsewhere, oil extended its decline below $50 a barrel as uncertainty loomed over whether Russia would agree to OPEC’s proposal for a large production cut. Gold held its 2% overnight surge.

These are the main moves in markets:

Stocks

-- Japan’s Topix index lost 3.2% as of 11:45 a.m. in Tokyo.

-- South Korea’s Kospi index retreated 2.3%.

-- The S&P 500 Index dropped 3.4%. Futures fell 0.9%.

-- Shanghai Composite fell 1%.

-- Hang Seng Index down 1.9%.

-- Australia’s S&P/ASX 200 Index lost 2.3%.

Currencies

-- The yen was at 105.93 per dollar after surging 1.3% the prior session.

-- The offshore yuan fell to 6.9560 per dollar.

-- The euro bought $1.1236.