Asia stocks hold up, China gives up some gains after weak trade data

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 per cent in late morning

HONG KONG – Most Asia-Pacific stocks markets strengthened on Wednesday, as expectations for stimulus from China and overnight gains on Wall Street boosted the mood.

MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.6 per cent in late morning.

China's equity indexes gave up some gains after poor trade data in May. The benchmark equity index was almost flat, while Hong Kong's Hang Seng (.HSI) added 1pc.

China's exports shrank much faster than expected in May and imports fell, albeit at a slower pace, as manufacturers struggled to find demand abroad and domestic consumption remained sluggish.

"Domestic demand is subdued, but external demand was even weaker... so that supports the case for more resolute monetary policy stimulus measures by the PBOC (People's Bank of China) to prop up domestic demand," said Carlos Casanova, senior Asia economist at UBP.

On Tuesday, China reportedly asked the biggest banks to cut deposit rates to boost the economy. Speculation of policy support for the troubled property sector has been lifting those shares over the past week.

Japan was an outlier, with the Nikkei sliding 0.8pc after touching a 33-year high on Tuesday.

"Overall, across the board, assets are doing pretty well," said Yuting Shao, macro strategist at State Street Global Markets. "The U.S. debt ceiling uncertainty (has been) removed (and) hope on China to introduce more help to the economy is also a good sign for the market."

The US S&P 500 ended higher on Tuesday, continuing to gain support from strengthening bets that the Federal Reserve will hold interest rates steady at its policy meeting next week.

The two-year Treasury yield, which typically moves in step with interest rate expectations, fell slightly to about 4.5pc in Tokyo, from Tuesday's close at 4.516pc. The yield on 10-year notes slipped to around 3.67pc.

The US dollar index was almost flat at 104.09.

The Australian dollar reached its highest since mid-May at $0.6690, extending a rally following a central bank rate increase on Tuesday. Oil prices steadied on Wednesday after the previous session's losses, as demand concerns owing to slow global economic growth were offset by expectations of tighter global supply following Saudi Arabia's pledge to deepen output cuts.

US crude was flat at $71.45 a barrel. Brent crude eased to $75.95 per barrel.

Gold was slightly higher, trading at $1,963.5 per ounce.

Leading cryptocurrency bitcoin was trading at about $27,000, consolidating after a sharp overnight rebound from as low as $25,350.

The token has been a paradoxical beneficiary of a U.S. Securities and Exchange Commission (SEC) crackdown on cryptocurrency exchanges, and the classification of tokens including Solana, Cardano and Polygon as securities.

"The SEC is making life nearly impossible for several altcoins," said Oanda senior market analyst Ed Moya. "And that is actually driving some crypto traders back into Bitcoin."