(Bloomberg) -- Japan equities extended an advance as better-than-expected economic growth fueled optimism over the market outlook. Benchmark indexes elsewhere in Asia were mixed.

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Japanese stocks led gains among major benchmarks, after the Topix Index closed at the highest level since 1990 on Tuesday. The nation’s markets may be on the cusp of a rare bull market, according to Goldman Sachs Group Inc.,

Wall Street strategists pointed to corporate reforms and loose monetary policy as drivers, with some arguing that equities may rise another 10%. The government said Wednesday gross domestic product expanded at the fastest pace in three quarters as a further easing of pandemic regulations boosted consumption.

Japan’s stock market has the potential to develop into one of policy-driven, sustainable bull markets, said Bruce Kirk, chief Japan equity strategist at Goldman Sachs. in Tokyo. “In the initial stages, at least with foreign buying, it’s really gonna be focused on quite a limited number of companies,” he said on Bloomberg Television.

Hong Kong stocks declined at the open as concerns lingered about the strength of China’s economy. Investors were also on the lookout for earnings release by Tencent Holdings Ltd. The tech giant is expected to post its biggest rise in quarterly revenue since 2021 on a gradual recovery in spending and advertising.

Shares advanced in South Korea and fell in Australia. US stock futures edged higher in Asia after the Nasdaq 100 closed up just 0.1% and the broader S&P fell, following a rapid decline in the final minutes of the session. President Joe Biden and House Speaker Kevin McCarthy were hopeful when asked whether a deal on the debt-ceiling could be reached within days to end a stalemate ahead of a potential US default.

Distorted Bills

The market impact of debt-ceiling concerns has been largely confined to distorted Treasury bill yields, with those maturing in early June trading at higher yields, according to Andrew Hollenhorst, chief US economist at Citigroup Inc.

“When a deal is passed to push the debt ceiling out, Treasury will look to rapidly rebuild its cash balance,” he wrote in a note. “That means significant issuance of T-bills and a drain of private-sector liquidity as cash currently in bank reserves and the Fed’s reverse repo program flows into Treasury’s cash account.”

Treasuries and the dollar were both little changed in early Asian trade. That was after US government debt fell across the curve on Tuesday, with the 30-year yield climbing to 3.90% — the highest since the run-up to the banking turmoil that erupted in early March.

New Zealand bond yields rose ahead of the nation’s budget, which is anticipated to show rising debt and wider deficits. Australian bonds also fell.

Fed Talks

Richmond Federal Reserve President Thomas Barkin said he was still looking to be convinced that inflation has been defeated and that he’d support raising rates further if needed. Cleveland Fed President Loretta Mester said the central bank is unable to do much about slow long-term economic growth, but can “do its part” by curbing prices.

US retail sales increased in April, suggesting consumer spending is holding up in the face of headwinds including inflation and high borrowing costs. Globally, sputtering growth in Germany and signs of easing momentum in China following April data released on Tuesday have heightened concerns of a worldwide slowdown.

“We are still positive on the reopening story,” said Lucy Meagher, investment adviser for Evans and Partners Pty, referring to China. “Investors might have hoped for a debt-fueled stimulus coming from the government in terms of the reopening. We are seeing it’s more likely to be a self-sufficient, consumer-led recovery.”

Elsewhere, oil fell for a second day as China’s lackluster recovery overshadowed a bullish outlook from the International Energy Agency and positive US data. Gold steadied after falling below $2,000.

Key events this week:

• Eurozone CPI, Wednesday

• BOE Governor Andrew Bailey delivers keynote speech, Wednesday

• US housing starts, Wednesday

• US initial jobless claims, Conference Board leading index, existing home sales, Thursday

• Japan CPI, Friday

• ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday

• New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.2% as of 10:27 a.m. Tokyo time. The S&P 500 fell 0.6%

• Nasdaq 100 futures rose 0.2%. The Nasdaq 100 rose 0.1%

• Japan’s Topix index rose 0.3%

• Hong Kong’s Hang Seng Index fell 0.1%

• China’s Shanghai Composite Index fell 0.3%

• Australia’s S&P/ASX 200 Index fell 0.6%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0870

• The Japanese yen was little changed at 136.41 per dollar

• The offshore yuan was little changed at 6.9958 per dollar

• The Australian dollar was little changed at $0.6660

Cryptocurrencies

• Bitcoin rose 0.5% to $27,087.26

• Ether rose 0.2% to $1,825.68

Bonds

• The yield on 10-year Treasuries was little changed at 3.53%

• Japan’s 10-year yield declined 0.5 basis point to 0.385%

• Australia’s 10-year yield advanced four basis points to 3.45%

Commodities

• West Texas Intermediate crude fell 0.2% to $70.73 a barrel

• Spot gold rose 0.2% to $1,992.36 an ounce

This story was produced with the assistance of Bloomberg Automation.

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