Alun John and Tom Westbrook

SINGAPORE/HONG KINGONG (Reuters] – Asian shares markets gained on Wednesday after overnight gains on Wall Street. But trading was slow due to high U.S yields and China’s cautious economic response.

As a sign that the mood is strange, the Japanese currency gained against the US dollar. After falling nearly every session for the past 2 weeks and setting new 20 year lows each time, it fell 0.5% to the lowest point in the week. This was due in part to higher yields.

The MSCI Asia-Pacific broadest index outside Japan rose 0.6%. This was its first positive session of the week, supported by gains in Hong Kong which gained 0.8% and Australia which reached a record close.

The Nasdaq rose 0.9% like the other regional markets tracking gains Wall Street, where the three major benchmarks enjoyed their best days in more than a month thanks to several strong earnings results. Closed 2.2% higher on the Nasdaq

It looked like this was the end of the rally, but Nasdaq futures plunged nearly 1% after Asia trade. This drop was driven by Netflix (NASDAQ:), shares dropping almost 1%, and market volatility when Netflix reported the first decrease in subscriptions in 10 years.

Futures dropped 0.4% while EUROSTOXX50 forwards rose 0.2%. The futures gained 0.15%.

China’s blue chips shrank 0.83% following the Central Bank keeping its benchmark lending rates constant despite repeated government promises to help a slower economy that was hit hard by the most severe COVID-19 epidemic in 2 years.

This decision helped to recover the stock after it had fallen to its lowest level since October, in early trading.

Carlos Casanova said that while investors had been looking for Chinese stimulus, the PBOC failed to deliver. The lockdowns which extended into April, and further beyond, have led to markets interpreting this negatively as they are preparing for the worst economic months.

He said that the PBOC decision was not surprising because the PBOC is worried about the effects of a rate increase with the U.S. at the moment. This could lead to outflows.

China’s 10 Year Government Bond yield fell to below the benchmark for the first time in 2010 (earlier this month). The Chinese 10 Year yield was last at 2.85%.

On Wednesday, benchmark 10-year Treasury yields remained within a hair of 3% — but they were very little different on the day — while inflation-protected yields were positive for the first times since 2020. [US/]

Japan’s yield differentials also play a role. The central bank of Japan offered Wednesday to purchase unlimited amounts of Japanese 10-year government bonds (JGB) at 0.2% in its third attempt to protect its yield target.

Expectations from the Bank of Japan that it will maintain its ultra-easy policy, while Federal Reserve rates rise have sent the yen against the US dollar reeling. But the dollar lost 0.2% Wednesday due to concerns that Japanese authorities may intervene verbally and/or physically.

The war in Ukraine, which has halted the euro from being bought in other currency markets, also cost $1.3025.

On Wednesday, oil prices rebounded from their sharp declines in the previous session. The main reason was concern about Russia’s tightening supplies and Libyan supply.

Futures rose 0.7% and reached $108/barrel