Asian stocks mixed as Chinese shares, bonds tumble

[SYDNEY] Asian stocks were mixed as investors continued to digest earnings, while bond and currency markets awaited an announcement on who will helm the Federal Reserve.

Equity benchmarks fluctuated in Japan, while Chinese shares fell, with the Shanghai Composite Index tumbling the most this year on an intraday basis as the nation's bond slump deepened. Hong Kong stocks pared back early gains. Profit reports due this week from some of the world's largest companies may show if there's enough juice in the earnings season to propel another leg higher for global shares. Speculation continues around who US President Donald Trump will choose as the next Fed chair, with Governor Jerome Powell said to be the front-runner.

Mr Trump last week stoked the sense of drama surrounding his choice, tweeting a video teasing an announcement he said would come this week. The president is leaning towards appointing Mr Powell, according to three people familiar with the matter.

Meanwhile, Bank of Japan Governor Haruhiko Kuroda looks favoured to steer monetary policy for another five years after his current term ends in April, the Nikkei newspaper reported, without citing anyone.

Earnings are coming thick and fast. Sinopec and PetroChina probably improved earnings in the third-quarter as higher oil prices helped refining margins, analysts said. Their results are in focus after Exxon and Chevron each posted double-digit profit increases on Friday. Three of China's big four banks report on Monday, after China Construction Bank earnings last week fueled optimism that interest margins and asset quality are improving. Shares have jumped this year on optimism a regulatory crackdown has eased and growth will boost earnings.

In Spain, the next hurdle in the battle with Catalonian separatists comes on Monday, when public employees have to decide which side to follow. Barcelona's streets flooded with hundreds of thousands of pro-unity demonstrators over the weekend, pressuring local lawmakers who pledged to defy Madrid's direct control of the region. Prime Minister Mariano Rajoy on Friday ousted Catalan's President Carles Puigdemont and dissolved his government after it declared independence.

On the US political scene, developments in Washington will be closely watched after a grand jury approved the first charges stemming from special counsel Robert Mueller's probe into Russian meddling in the 2016 election and possible collusion with Mr Trump's campaign, according to multiple news reports.

Here are some key upcoming events this week: Mr Trump has said he'll reveal his choice to lead the Fed by Friday.

The Fed's next rate decision is on Wednesday, with economists expecting the central bank to keep rates at 1.25 per cent and to increase them at the December meeting.

The US October payroll report comes out Friday. On Monday, personal income and spending data comes out, which features the Fed's preferred inflation gauge.

Mr Trump starts an 11-day trip to Asia, his first as president, on Friday. He's scheduled to visit Japan, South Korea, China, Vietnam and the Philippines for talks with leaders and to visit the Apec and Asean summits. Trade and security issues - particularly North Korea - will probably be in focus.

A week packed with earnings releases culminates with Apple Inc results on Friday.

And these are the main moves in markets: Stocks Japan's Topix index fell 0.2 per cent as at 11.32am in Tokyo. South Korea's Kospi index gained 0.2 per cent and Australia's S&P/ASX 200 Index rose 0.4 per cent. The Shanghai Composite Index fell 1.2 per cent after earlier dropping as much as 1.7 per cent, the most since December.

The Hang Seng Index was little changed.

Futures on the S&P 500 Index slid 0.2 per cent. The underlying gauge climbed 0.8 per cent on Friday, when the Nasdaq Composite surged 2.2 per cent.

The Bloomberg Dollar Spot Index fell less than 0.1 per cent.

The yen was at 113.62, near its weakest since July.

The euro was little changed at $1.1611 and the pound traded at $1.3135.

The Aussie bought 76.73 US cents.

The New Zealand dollar fell 0.4 per cent to 68.50 US cents. The country's new finance minister, Grant Robertson, said at the weekend that reforming the Reserve Bank of New Zealand's monetary policy mandate could potentially result in lower interest rates.

The yield on 10-year Treasuries edged lower and was at little changed at 2.40 per cent after rising as high as 2.48 per cent during the Friday session.

Australia's 10-year yield declined five basis points to 2.72 per cent in Monday trading.

China's 10-year yield climbed four basis points to 3.89 per cent, touching the highest since 2014.

West Texas Intermediate crude was little changed at US$53.94 after rising 2.4 per cent on Friday, when it hit the highest in about six months.

Gold slipped 0.2 per cent to US$1,271.68 an ounce.

BLOOMBERG