Rising bond yields support value stocks ahead of central bank meetings

TOKYO (Reuters) – Bond yields climbed and stock markets held steady on Wednesday, as hopes of easing U.S.-China tensions and diminished risk of a no-deal Brexit prompted traders to take profit before key central bank meetings.

FILE PHOTO: A man walks past a stock quotation board outside a brokerage in Tokyo December 4, 2013. REUTERS/Toru Hanai/File Photo

Oil prices also firmed, underpinned by a big drop in U.S. crude stockpiles, after slipping the previous day.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4% to hit a fresh 5-1/2-week high.

Stock investors around the world continued to rotate into value stocks, representing a major reversal after many months of outperformance by growth shares such as tech companies.

Japan’s Nikkei average climbed 0.9%, with the Topix Value index jumping 1.9% whereas the Topix Growth added 0.8%.

The Shanghai Composite and the blue-chip CSI300 were almost flat and down 0.3%, respectively, while Hong Kong’s Hang Seng advanced 1.4%.

On Wall Street, the S&P 500 ended little changed as a rally in energy and industrial shares countered a drop in the technology and real-estate sectors with investors favoring value over growth.

“The sudden jump in value-oriented shares in the U.S. and elsewhere has all the hallmarks of position unwinding by major hedge funds,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

“Such unwinding could continue for a few days but will likely end by the Fed’s policy meeting.”

Such reversals began last week after the announcement of U.S.-China trade talks in October and as the British parliament moved to

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