Stocks gain, bonds calm as Fed outlook trumps Moody's downgrade
By Kevin Buckland
TOKYO (Reuters) — Stocks in Asia rose on Monday while Treasuries and the dollar kept their composure, as investors took their lead from Wall Street's Friday rally, shrugging off a Moody's (NYSE:MCO) downgrade to the U.S. credit outlook.
Tech stocks stood out, as they had in the U.S. at the end of last week, after the calming of long-term Treasury yields since the start of this month boosted the outlook for borrowing-dependent growth shares.
U.S. 10-year Treasury yields were stable at around 4.646%, consolidating around the top of their range since Nov. 3, when softer labour market data spurred bets for a less hawkish Federal Reserve. The yield had been as high as 4.935% on Nov. 1.
The U.S. dollar index hovered below its post-payrolls-report high of 106.01, reached on Friday, last trading little changed around 105.80.
Japan's Nikkei rose 0.46%, with chip-related shares providing the biggest boost. Taiwan's tech-heavy equity benchmark rallied 1.17%.
Hong Kong's Hang Seng gained 0.49% amid an outperformance in tech shares.
However, mainland Chinese blue chips were slightly lower, and Australia's resource-heavy benchmark slipped 0.13%.
Nomura Securities strategist Naka Matsuzawa said equities are likely close to a peak.
«Up until now the market has been taking bad economic news as good news, because that would mean a pause in Fed rate hikes,» he said.
«But now, the Treasury market has already priced in a pause, so there's not much room for Treasury yields to fall further,» removing a support for the stock market, he added. «In short, I don't think the stock market rally is going to continue.»
The market paid little attention to a Moody's announcement late on Friday that it had lowered its outlook on the
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