Asian stocks falter as yuan weakens: Reuters

Asian stocks falter as yuan weakens: Reuters

© Reuters. A passerby walks past an electric monitor displaying the stock index of various countries outside a bank in Tokyo, Japan March 22, 2023. REUTERS/Issei Kato/File Photo

By Tom Westbrook

SINGAPORE (Reuters) – Asian stocks struggled to gain ground on Tuesday as mixed messages from U.S. monetary policymakers and hesitancy among left-leaning traders weighed on the outlook with the release of data on Friday. American inflation.

The risk that Japan would intervene to prevent further decline in the yen weighed on the dollar, but it appreciated against the yuan on speculation that China might tolerate a weaker currency. (FRX/)

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%, led by gains at South Korean chipmaker Kospi. Other markets lacked direction and drifted to one side or the other of stability, with sentiment in China and Hong Kong remaining fragile after the yuan’s sudden fall on Friday.

Investors in Hong Kong were waiting for signs of support for the property market and seeing whether the yuan’s unexpected fall on Friday signaled a change in policy, said Steven Leung, director of institutional sales at brokerage UOB Kay Hian.

Insurer AIA, down 17% in 10 trading days since the company did not promise new buybacks when announcing its results, underlined the fragile atmosphere.

was stable, as was the yen, which last traded at 151.38 to the dollar. increased by 0.1%. European futures were stable. fell 0.3%.

A mixed outlook from Federal Reserve officials on Monday threw some uncertainty into the policy outlook as markets await the next U.S. inflation indicators due on Good Friday.

Chicago Fed President Austan Goolsbee said he planned three rate cuts this year, while Fed Governor Lisa Cook urged caution and Fed President Atlanta’s Raphael Bostic reiterated his comments from Friday reducing his expectations to just one drop.

“Feedback from FOMC participants suggests to us that four voters – Bostic, Bowman, Mester and Barkin – see no, one or two cuts this year,” said Standard Chartered (OTC:) strategist Steve Englander.

“We still think (Chairman Jerome) Powell has eight votes in favor of easing, but he probably doesn’t want an 8-4 vote on the first cut of the cycle. Instead, he can hope for good results in inflation will allow him to throw some votes into the camp of the cutters in the months to come.

YEN STABLE, YUAN SLIDING

U.S. interest rate futures forecast about three Fed rate cuts this year and about a three-in-four chance the first cut will come in June.

U.S. two-year yields, which track short-term interest rate expectations, rose overnight in New York trading, then fell 3.5 basis points in Asian trading , at 4.59%. (WE/)

On foreign exchange, Monday’s rhetoric from Japan’s top currency diplomat, Masato Kanda, kept the yen steady as traders weigh the risk of Japan buying heavily. Kanda said the yen’s recent decline was “strange” and “speculative.”

The Bank of Japan (BOJ) raised interest rates last week, but the yen fell near a three-decade low against the dollar.

The Chinese yuan opened steady after a stronger-than-expected fix at its trading band, but selling pressure quickly drove it toward the weak side of its 200-day moving average, at 7.2184 per dollar.

Markets were unsettled by a sharp decline in the yuan on Friday, after months of tight trading, and some speculate that China is loosening its grip on the currency to allow it to fall.

“Whether this reflects a change in exchange rate policy remains to be seen, but accommodative monetary conditions are necessary in the face of headwinds to growth,” said Adarsh ​​Sinha, strategist at BofA Securities.

“If the depreciation (of the yuan) continues and coincides with a weaker credit impulse, Asian currencies are vulnerable.”

Later Tuesday, figures for US manufacturing, services and consumer confidence will be due. Core U.S. PCE data is due Friday.

Gold and oil prices were broadly flat in commodity trading at $2,172 an ounce with futures up 7 cents a barrel at $86.82. (GOL/)(O/R)

hovered just above $70,000 after rising sharply on Monday.

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