(Bloomberg) — The yen fell to its weakest level since 1990, prompting traders to intervene, while Asian stocks rose after U.S. stocks posted their best weekly rally of 2024.
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The Japanese currency fell to over 160 per dollar on Monday due to low liquidity on a holiday. Traders have speculated about when authorities might start buying the yen to stem a decline. The decline has accelerated since late last week as Bank of Japan Governor Kazuo Ueda played down the impact of the weak yen on inflation.
“Government intervention to stabilize the currency through the sale of foreign reserves is also becoming increasingly likely,” economists including Duncan Wrigley of Pantheon Macroeconomics said in a note on Monday.
Hong Kong stocks led the region’s rally, with the Hang Seng Index heading into a technical bull market. Chinese benchmarks also rose. The gains reinforce signs of a revival in the once-troubled market amid a return of foreign money and improving profits. Real estate stocks rose sharply after major developer CIFI Holdings Group Co. reached a solution to its liquidity problems with bondholders.
U.S. stock futures also rose slightly, adding more than 1% to Friday’s gains for the S&P 500 and Nasdaq 100.
Bond yields in Australia and New Zealand fell. An index of the dollar remained stable on Monday. Due to the holiday in Japan, US Treasuries are not traded on Asian times.
Traders will also be focused on the Federal Reserve’s policy meeting on Wednesday after the central bank’s preferred inflation gauge rose sharply in March, albeit roughly in line with estimates. With officials likely to keep interest rates at their highest level in more than two decades, interest in any reversal will be in the tone of Chairman Jerome Powell’s post-meeting statement and news conference.
“With all measures of U.S. consumer prices showing strong increases over the past three to four months, the FOMC is bound to deviate significantly from its previous forecasts of significant policy easing this year,” Société Générale economists including Klaus Baader wrote. in a note to customers. “Nevertheless, the markets have already drastically reduced the pricing of interest rate cuts. “So if Chairman Powell doesn’t raise the possibility of rate hikes, the market damage is likely to be moderate.”
A gauge of U.S. Treasury yields fell 2.3% this month, the biggest monthly decline since February last year, as hawkish Fed comments and strong economic data pushed back interest rate cut bets. Swap traders now see only one Fed rate cut for all of 2024, well below the roughly six quarter percent rate cuts they had expected at the start of 2024.
Read more: Fed Rate Cut Debate Shifts From ‘When’ to ‘If’ Based on Inflation Data
Oil prices fell and gold fell slightly in Asian trading as U.S. 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 final chance to persuade Israel to call off an attack Rafah.
In company news, Elon Musk took an unannounced trip to China on Sunday. Tesla Inc.’s chief is seeking approval for driver-assistance software that could help halt the automaker’s declining sales. Separately, L’Occitane International SA’s billionaire owner Reinold Geiger is close to making a bid to privatize the skin care company, according to people familiar with the matter.
Some important events this week:
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All four Chinese megabanks will report their first quarter results on Monday
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Germany CPI, Monday
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Eurozone economic confidence, consumer confidence, Monday
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Retail sales in Australia, Tuesday
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China Caixin Manufacturing PMI, Non-Manufacturing PMI, Manufacturing PMI, Tuesday
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Japan unemployment, industrial production, retail sales, Tuesday
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Eurozone CPI, GDP, Tuesday
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Tariff decision for Colombia, Tuesday
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Amazon results, Tuesday
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Unemployment in New Zealand, Wednesday
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UK S&P Global / CIPS Manufacturing PMI, Wednesday
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US interest rate decision, Wednesday
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Indonesia CPI, Thursday
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South Korea Consumer Price Index, S&P Global Manufacturing PMI, Thursday
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Eurozone S&P Global Manufacturing PMI, Thursday
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Apple earnings, Thursday
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Unemployment in the Eurozone, Friday
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Tariff decision for Norway, Friday
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US Unemployment, Non-Farm Payrolls, ISM Services, Friday
Some of the key moves in the markets:
Shares
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S&P 500 futures rose 0.2% at 11:38 a.m. Tokyo time
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Nikkei 225 futures (OSE) up 2%
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Australia’s S&P/ASX 200 rose 0.8%
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Hong Kong’s Hang Seng rose 1.6%
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The Shanghai Composite rose 0.8%
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Euro Stoxx 50 futures rose 0.4%
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Nasdaq 100 futures rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index was little changed
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The euro rose 0.2% to $1.0717
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The Japanese yen fell 0.6% to 159.32 per dollar
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The offshore yuan was little changed at 7.2620 per dollar
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The Australian dollar rose 0.5% to $0.6565
Cryptocurrencies
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Bitcoin fell 1.2% to $62,893.38
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Ether fell 2.1% to $3,239.96
Tie up
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The 10-year Treasury yield fell four basis points to 4.66%
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Japan’s 10-year yield rose 3.5 basis points to 0.925%
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Australia’s 10-year yield fell three basis points to 4.49%
raw materials
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West Texas Intermediate crude fell 0.8% to $83.14 a barrel
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Spot gold fell 0.4% to $2,328.44 an ounce
This story was produced with support from Bloomberg Automation.
– With assistance from Matthew Burgess.
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