SINGAPORE, Sept 12 (Reuters) – Asian stock markets
nudged sideways on Tuesday while the dollar took a breather, its
recent gains chastened by resistance from central banks in China
and Japan and by traders waiting on U.S. inflation data to
signal that interest rates may have peaked.
The yen notched its best day against the dollar in
two months overnight, after Bank of Japan Governor Kazuo Ueda
said policymakers might have enough economic information by
year’s end to determine that short-term rates will need to rise.
The yuan had its best day in six months after
authorities vowed to correct one-way moves and Reuters reported
the central bank had stepped up scrutiny of dollar buying.
Both, however, remain near their weakest levels of the year
and with the yuan at 7.3022 per dollar in offshore
trade and the yen last a little off Monday highs at 146.68 per
dollar.
Japanese government bonds remained under pressure on
Tuesday, with 10-year JGB yields up 1 basis point to a fresh
high of 0.71%.
“The result of Ueda’s comments was an intense move higher in
Japanese swaps and government bond yields,” said Chris Weston,
head of research at brokerage Pepperstone in Melbourne.
“(It) is certainly constructive for yen longs. (But) I
refrain from getting too excited at this stage…where the
actions are more of a medium-term issue – we won’t get the
outcome of the spring wage negotiations until April 2024.”
MSCI’s broadest index of Asia-Pacific shares outside Japan
was flat. Japan’s Nikkei rose 0.3%, with
markets looking to U.S. inflation data and this week’s European
Central Bank meeting to set interest rate expectations and the
mood.
Due on Wednesday, markets are expecting the U.S. figures to
show annualised core inflation falling to 4.3% in August though
the headline number is seen ticking up to 3.6%.
“A lower-than-expected print may slow the U.S. dollar’s rise
while higher print could potentially un-nerve risk sentiments as
it would reinforce market expectations for further rate hikes,
and this could fuel dollar strength,” said OCBC strategist
Christopher Wong.
Interest-rate futures markets are pricing about a 45% chance
of another U.S. rate hike by year’s end.
Investors’ appetite for risk is also to be tested this week
when British chip designer Arm Holdings lists in New York with a
goal of raising almost $5 billion.
Overnight, the weaker dollar and upgrade on Tesla from
analysts at Morgan Stanley helped U.S. stock markets gain. Tesla
rose 10%. The S&P 500 rose 0.7%.
In early Asia trade, U.S. futures slipped 0.2%.
Elsewhere in currency trade, the Australian dollar
was weighed by a further slip in consumer sentiment, which has
been below the neutral 100 mark since March 2022 – the longest
streak since a recession in the early 1990s.
The Aussie, which bounced on Monday with gains in
the yuan, was last down 0.1% at $0.6424. The New Zealand dollar
also dipped 0.1% to $0.5911.
The euro gained on the dollar overnight but moves
have been muted with investors dialling back long euro positions
ahead of Thursday’s ECB meeting. Pricing implies
about a 56% chance that policymakers leave rates on hold.
“There is a sense that ECB is already done for the cycle,”
said Maybank analysts in a note to clients.
“Recent PMI prints suggest that growth outlook could be
deteriorating and puts the euro at risk of further downside.
This is all the more amplified by lingering expectations for the
Fed to hike further.”
Benchmark 10-year Treasury yields were steady at
4.2980%.
In commodity markets, Brent crude futures were
steady at $90.59 a barrel. Gold hung on at $1,921 an
ounce, while bitcoin was out of favour and dropped
below $25,000 for the first time in three months.
(Editing by Lincoln Feast.)
