(Bloomberg) — A slide in the Japanese yen to its weakest since 1990 has put currency traders on edge, while Asian stocks climbed after US equities notched the best weekly rally of 2024.
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The yen fell past 160 per dollar on Monday amid thin liquidity during Japan’s public holiday. Traders have been guessing as to when authorities might start buying the currency to support the yen. Its declines have accelerated since late last week as Bank of Japan Governor Kazuo Ueda played down the impact of the weak yen on fueling inflation.
“Government intervention to stabilize the currency through selling foreign reserves is also looking increasingly likely,” economists including Duncan Wrigley from Pantheon Macroeconomics said in a Monday note.
Equities in Australia, South Korea and Hong Kong advanced. Chinese shares fluctuated after data showed a slump in the country’s industrial profits. US share futures edged higher, bolstering Friday gains of more than 1% for the S&P 500 and Nasdaq 100.
Australian and New Zealand bond yields fell, following US Treasuries on Friday. An index of the dollar advanced Monday. US government debt will not trade in Asian hours given the holiday in Japan.
Traders will also be focusing on the Federal Reserve’s policy meeting on Wednesday after the central bank’s preferred measure of inflation rose at a brisk pace in March, though roughly in line with estimates. With officials likely to hold rates steady at a more than two-decade high, interest will be on any pivot in the tone of the post-meeting statement and Chair Jerome Powell’s press conference.
“With all measures of US consumer prices showing a steep acceleration over the past three to four months, the FOMC is bound to row back hard from its earlier predictions of meaningful policy easing this year,” Societe Generale economists including Klaus Baader wrote in a note to clients. “That said, markets have already scaled back pricing of rate cuts drastically, so unless Chair Powell plays up the possibility of rate hikes, the market damage is likely to be modest.”
A gauge of US Treasury returns has slumped 2.3% this month, set for the biggest monthly drop since February last year, as hawkish Fedspeak and strong economic data pushed back rate-cut bets. Swaps traders now see only one Fed reduction for all of 2024, well below the roughly six quarter-point cuts they expected at the start of 2024.
Read More: Fed Rate-Cut Debate Shifts From When Toward If on Inflation Data
Oil fell and gold edged lower in early Asian trading as US Secretary of State Antony Blinken steps up efforts to secure a truce in Gaza in meetings in the Middle East on Monday, in what could be a final chance to persuade Israel to call off an attack on Rafah.
In corporate news, Elon Musk made an unannounced trip to China on Sunday. The Tesla Inc. chief is seeking approval for driver-assistance software that could help arrest the carmaker’s revenue 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 firm at about $7 billion including debt.
In addition to Japan, Vietnam’s markets will also be closed Monday. Elsewhere this week, European inflation readings are due while Amazon.com Inc. and Apple Inc. report earnings. The US Treasury is also set to keep its sales of long-term debt steady in a new plan this week.
Some key events this week:
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All four Chinese megabanks report first-quarter earnings, Monday
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Germany CPI, Monday
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Eurozone economic confidence, consumer confidence, Monday
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Australia retail sales, 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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Colombia rate decision, Tuesday
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Amazon earnings, Tuesday
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New Zealand unemployment, Wednesday
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UK S&P Global / CIPS Manufacturing PMI, Wednesday
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US rate decision, Wednesday
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Indonesia CPI, Thursday
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South Korea CPI, 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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Eurozone unemployment, Friday
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Norway rate decision, Friday
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US unemployment, nonfarm payrolls, ISM Services, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures rose 0.2% as of 10:49 a.m. Tokyo time
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Australia’s S&P/ASX 200 rose 0.5%
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Hong Kong’s Hang Seng rose 0.5%
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The Shanghai Composite fell 0.2%
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Euro Stoxx 50 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 $1.0712
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The Japanese yen fell 0.6% to 159.27 per dollar
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The offshore yuan was little changed at 7.2638 per dollar
Cryptocurrencies
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Bitcoin fell 0.7% to $63,188.02
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Ether fell 0.9% to $3,279.12
Bonds
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The yield on 10-year Treasuries declined four basis points to 4.66%
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Japan’s 10-year yield advanced 3.5 basis points to 0.925%
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Australia’s 10-year yield declined two basis points to 4.50%
Commodities
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West Texas Intermediate crude fell 1% to $83 a barrel
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Spot gold fell 0.5% to $2,326.87 an ounce
This story was produced with the assistance of Bloomberg Automation.
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