Yen falls, Asian shares follow US peers higher: markets close

(Bloomberg) — A drop in the Japanese yen to its weakest since 1990 has currency traders on edge, while Asian shares rose after U.S. stocks posted their best weekly rally of 2024.

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The yen fell above 160 per dollar on Monday due to limited liquidity during the Japanese holiday. Traders have been guessing when authorities might start buying the currency to support the yen. The declines have accelerated since late last week, when Bank of Japan Governor Kazuo Ueda downplayed the impact of the weak yen in fueling inflation.

“Government intervention to stabilize the currency through the sale of foreign reserves also appears increasingly likely,” economists including Duncan Wrigley of Pantheon Macroeconomics said in a note on Monday.

Stocks in Australia, South Korea and Hong Kong advanced. Chinese stocks fluctuated after data showed the country's industrial profits fell. U.S. stock futures edged higher, extending Friday's gains of more than 1% for the S&P 500 and Nasdaq 100.

Yields on Australian and New Zealand government bonds fell, following US government bond yields on Friday. An index of the dollar advanced Monday. US Treasuries will not trade in Asian hours due to Japan's holiday.

Traders will also focus on the Federal Reserve's policy meeting on Wednesday after the central bank's preferred inflation measure rose at a rapid pace in March, though roughly in line with estimates. With officials likely to keep interest rates steady at their highest levels in more than two decades, interest will focus on any twist in the tone of the statement after Chairman Jerome Powell's meeting and news conference.

“With all measures of US consumer prices showing a steep acceleration over the past three to four months, the FOMC will undoubtedly pull back sharply from its previous forecasts of meaningful policy easing this year,” Societe Generale economists including Klaus Baader wrote in a note note. to customers. “That said, markets have already dramatically scaled back the price of rate cuts, so unless Chairman Powell emphasizes the possibility of rate hikes, market damage is likely to be modest.”

A gauge of U.S. Treasury yields fell 2.3% this month, marking the biggest monthly drop since February last year, after aggressive Fedspeak and strong economic data pushed back rate cuts. Swap traders now see just one Fed cut for all of 2024, well below the roughly six quarter-point cuts they expected in early 2024.

Read more: Fed rate cut debate shifts from 'when' to 'if' based on inflation data

Oil fell and gold fell in early Asian trading as US Secretary of State Antony Blinken steps up efforts to secure a ceasefire in Gaza at meetings in the Middle East on Monday, in what could be a last chance to convince Israel to call off an attack. on Rafa.

In company news, Elon Musk made an unannounced trip to China on Sunday. The head of Tesla Inc. is seeking approval for driver assistance software that could help stem the automaker's sales decline.

L'Occitane International SA's billionaire owner Reinold Geiger is close to making an offer to take the skin care company private, according to people familiar with the matter. A potential deal could value the company at around $7 billion, including debt.

In addition to Japan, the Vietnamese markets are also closed on Monday. Elsewhere this week, European inflation figures are out, while Amazon.com Inc. and Apple Inc. report profit figures. The U.S. Treasury Department will also hold sales of long-term debt steady this week under a new plan.

Some important events this week:

  • All four Chinese megabanks will publish their first-quarter earnings results on Monday

  • Germany CPI, Monday

  • Economic confidence in the eurozone, consumer confidence, Monday

  • Retail sales in Australia, Tuesday

  • China Caixin Manufacturing PMI, Non-Manufacturing PMI, Manufacturing PMI, Tuesday

  • Unemployment in Japan, industrial production, retail sales, Tuesday

  • Eurozone CPI, GDP, Tuesday

  • Colombia tariff decision, Tuesday

  • Amazon earnings, Tuesday

  • Unemployment in New Zealand, Wednesday

  • UK S&P Global / CIPS Manufacturing PMI, Wednesday

  • US interest rate decision, Wednesday

  • Indonesia CPI, Thursday

  • South Korea CPI, S&P Global Manufacturing PMI, Thursday

  • S&P Global Manufacturing PMI for the Eurozone, Thursday

  • Apple earnings, Thursday

  • Unemployment in the eurozone, Friday

  • Tariff decision Norway, Friday

  • U.S. Unemployment, Nonfarm Payrolls, ISM Services, Friday

Some of the major moves in the markets:

Shares

  • S&P 500 futures rose 0.2% as of 10:49 a.m. Tokyo time

  • Australia's S&P/ASX 200 rose 0.5%

  • Hong Kong's Hang Seng rose 0.5%

  • The Shanghai Composite fell 0.2%

  • Euro Stoxx 50 futures rose 0.3%

Currencies

  • The Bloomberg Dollar Spot Index was little changed

  • The euro rose 0.2% to $1.0712

  • The Japanese yen fell 0.6% to 159.27 per dollar

  • The offshore yuan was little changed at 7.2638 per dollar

Cryptocurrencies

  • Bitcoin fell 0.7% to $63,188.02

  • Ether fell 0.9% to $3,279.12

Bonds

  • The yield on ten-year government bonds fell by four basis points to 4.66%

  • The Japanese ten-year yield rose by 3.5 basis points to 0.925%

  • The Australian ten-year yield fell by two basis points to 4.50%

Raw materials

  • West Texas Intermediate crude fell 1% to $83 a barrel

  • Gold fell 0.5% to $2,326.87 an ounce

This story was produced with the help of Bloomberg Automation.

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