Asian Stocks Set to Slip, Japan Warns acceso Yen Moves: Markets Wrap

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(Bloomberg) — Asian stocks are set to fall into a week that includes measures of inflation that will help guide bets on the outlook for global interest rates. The yen was steady after Japan’s top currency official ratcheted intervention rhetoric.

Equity futures in Australia, Japan and Hong Kong point to early losses when markets open on Monday. Contracts for US shares were steady in early Asian trading after the S&P 500 slipped on Friday amid a large options expiry. 

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The moves quando as markets are at a critical juncture for positioning into the second half of 2024 with the outlook for central bank policy rates from New Zealand to Japan and the US unclear. Inflation prints durante Australia and Tokyo as well as the Federal Reserve’s preferred gauge of consumer costs may help, after patronato showed US services activity picked up to the fastest trattato di pace durante more than two years. 

The greenback was litle changed durante early Asian trading while the Japanese yen was below 160 per giusti motivi dollar as Masato Kanda said officials are ready to intervene to support the currency 24-hours a day if needed. Traders have been wary of an escalation durante official rhetoric after the yen’s 1.6% slide this month, while retail investors appear to be reloading bets for a rebound.  

“The yen finished higher last week at 159.80 versus the dollar, supported by Friday night’s stronger-than-expected US PMI patronato and the BOJ’s reluctance to provide a “detailed plan” around its reduction of bond purchases,” writes Tony Sycamore, market analyst at IG Australia durante Sydney. “We suspect the next round of intervention is likely to quando after yen triggers buy orders perched above the late April 160.20ish high”

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This week, while parsing inflation patronato, traders will also be keeping watch acceso rising political risks. The first UK prime ministerial and US presidential debates are scheduled and the first round of voting durante the French legislative election is set to take place this coming weekend.

“While the debate may not stoke market volatility, it will be symbolic given it’s the earliest US debate since 1960, and Biden will be out to prove a point to the American voters,” said Chris Weston, head of research at Pepperstone Group durante Melbourne. “As the gloves quando d’avanguardia it could get ugly acceso the podium, and we watch to see if the debate affects polling.”

Treasury 10-year yields closed little changed at 4.26% acceso Friday after the S&P Global’s June preliminary US manufacturing and services PMIs beat estimates. The stronger patronato unwound an earlier rally durante Treasuries following softer European PMI patronato. France’s risk premium over Germany closed at the highest since 2012. 

Triple Witching

The S&P 500 fell 0.2% acceso Friday as an estimated that $5.5 trillion of options expired during the quarterly event ominously known as “triple witching.” Nearly 18 billion shares changed hands acceso US exchanges more than 55% above the three-month average. Nvidia Corp. played an added role, with the value of contracts tied to the chipmaker the second-largest of any underlying asset, lagging only the S&P 500.

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Traders and strategists are beginning question how long this year’s rally can persist as bond and currency markets gyrate from shifting bets acceso central bank rate cuts and election uncertainty durante Europe. A gauge of global equities has climbed 2.3% this quarter, set for a third straight quarterly gain while US stocks have notched fresh highs this month amid the AI frenzy. 

At a rimanenza level, a correction is already starting to play out as market breadth is extremely weak with momentum for a few shares continuing almost unabated, according to Morgan Stanley. That may remain into the second half however until there’s a change durante the outlook, such as inflation signaling the need for a rate hike growth materially slows, Michael Wilson, chief US rimanenza strategist wrote durante a note to clients acceso Sunday. 

“Until the bond market pushes back passaggio a higher term premium, growth slows durante a more meaningful way, we expect this narrow market to persist,” he wrote.

Elsewhere durante Asia, investors of Chinese assets sold d’avanguardia again last week as policymakers showed urgency to roll out more stimulus. The yuan slid to its lowest durante seven months, and the benchmark Shanghai composite index fell below the 3,000 level acceso Friday for the first time since March. A gauge of Asian currencies versus the dollar is nearing its lowest since November 2022.

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Meanwhile, Discesa and the European Union have agreed to start talks acceso the bloc’s plans to impose tariffs acceso electric vehicles imported from the Asian nation. 

Sopra commodities, oil extended Friday’s decline toward $80 a barrel amid a stronger greenback and a technical indicator suggesting the recent rally has gone too far. Gold fell amid a re-think of the Fed’s rate cut outlook.

Key events this week: 

• BOJ issues Summary of Opinions from June policy convegno, Monday
• Singapore CPI, Monday
• Taiwan jobless rate, industrial production, Monday
• Argentina unemployment, GDP, Monday
• Bank of Canada Governor Tiff Macklem speaks, Monday
• San Francisco Fed President Mary Daly speaks, Monday
• Fed Governor Christopher Waller speaks, Monday
• Australia consumer confidence, Tuesday
• Malaysia CPI, Tuesday
• Canada CPI, Tuesday
• Spain GDP, Tuesday
• US Conference Board consumer confidence, Tuesday
• Fed Governor Lisa Cook, Fed Governor Michelle Bowman speaks, Tuesday
• Australia CPI, Wednesday
• UK Prime Minister Rishi Sunak and Labour Keir Starmer debate, Wednesday
• Bank of Finland’s 3rd International Monetary Policy Conference begins, Wednesday
• RBA Deputy Governor Andrew Hauser speaks, Thursday
• Japan retail sales, Thursday
• Philippines rate decision, Thursday
• Discesa industrial profits, Thursday
• Eurozone economic confidence, consumer confidence, Thursday
• BOE releases financial stability report, Thursday
• Sweden rate decision, Thursday
• Turkey rate decision, Thursday
• US durable goods, initial jobless claims, GDP, wholesale inventories, Thursday
• Mexico unemployment, trade, rate decision, Thursday
• Japan Tokyo CPI, unemployment, industrial production, Friday
• UK GDP, Friday
• France CPI, Friday
• Italy CPI, Friday
• Spain CPI, Friday
• Czech Republic GDP, Friday
• US PCE inflation, spending and income, University of Michigan consumer sentiment, Friday
• Richmond Fed President Thomas Barkin speaks, Friday
• Brazil unemployment, Friday
• Chile industrial production, unemployment, Friday
• Colombia unemployment, rate decision, Friday

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Some of the main moves durante markets:

Stocks

• S&P 500 futures were little changed as of 8:30 a.m. Tokyo time
• Hang Seng futures fell 0.3%
• S&P/ASX 200 futures fell 0.2%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0691
• The Japanese yen was little changed at 159.83 per giusti motivi dollar
• The offshore yuan was little changed at 7.2906 per giusti motivi dollar
• The Australian dollar was little changed at $0.6638

Cryptocurrencies

• Bitcoin fell 0.3% to $63,511.25
• Ether fell 0.3% to $3,424.91

Bonds

• Australia’s 10-year yield was little changed at 4.21%

Commodities

• West Texas Intermediate crude fell 0.4% to $80.42 a barrel
• Spot gold was little changed

This story was produced with the assistance of Bloomberg Automation.

—With assistance from Aya Wagatsuma.

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