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Bonds, Yuan, tech in focus

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Fuseworks Media
Fuseworks Media

By Michael McCarthy (chief market strategist, CMC Markets and Stockbroking)

Bond markets around the world are under pressure as reports flagged a change of policy at the Bank of Japan. The US dollar lifted again, and forex traders will look to today’s USD/CNY fix for further weakening of the yuan and towards 7.00 per US dollar. Tech stocks helped lift share markets and Google parent Alphabet reported strongly after the New York close.

Interest rate curves are steepening. Japanese ten year bond futures are off 4 points, and Australian futures are off 5.5 points. News that BoJ officials are considering moving away from their policy to hold ten year bond yields near zero sparked the sell-off, despite a re-iteration of the BoJ intention to act in the market if the yield reaches 0.11%.

Regional share futures are pointing to higher levels for stocks after Europe and US markets traded flat. Volumes are lower as investors await the full picture of earnings. The release after the close of Alphabet’s quarterly result saw its stock jump 5% in post market trading, although it has now given up some of the early gains. This could lend a tech flavour to Asia Pacific trading today.

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