Dollar falls, Japanese shares rise in weak trade: Markets overview

(Bloomberg) — The dollar weakened against its Group of 10 peers and Japanese shares rose amid weak trading on Monday, with many major centers in Asia closed for Lunar New Year celebrations.

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The Topix index jumped about 0.9 percent, while Australian shares reversed small initial gains. U.S. stock futures edged lower after a rally on Friday as the S&P 500 rose for the first time in four days and the tech Nasdaq 100 posted its biggest one-day gain since November as Google parent Alphabet Inc. and Netflix Inc . jump. European stock contracts rose.

Government bonds were little changed in Asia, while bond yields rose in Australia and New Zealand, tracking moves in the US debt market on Friday. Japan’s benchmark 10-year bond yield was unchanged at 0.4 percent, 10 basis points below the ceiling set by policymakers in Tokyo.

“The Bank of Japan will continue to be that central bank that stands on its own and tries to almost sing its own song,” Katrina Ell, an economist at Moody’s Analytics Inc., said on Bloomberg Television. “Domestic demand in Japan is still incredibly weak, so they’re trying to resist that tightening desire that we’ve seen from other developed and even emerging economies.”

The yen rose about 0.1% amid broad greenback weakness. Global market traders across multiple asset classes take cues from US central bankers. Federal Reserve Governor Christopher Waller said on Friday that policy appears close to being sufficiently restrictive, and he supported moderation in the size of rate hikes. Philadelphia Federal Reserve President Patrick Harker reiterated his view of more gradual steps in raising interest rates, and Kansas City Federal Reserve President Esther George said the economy could avoid a sharp downturn.

Yet as optimism has grown, US financial conditions have become less restrictive, raising another potential challenge to efforts to tame inflation that could give policymakers reason to rethink their views.

IG Markets Inc. analyst Hebe Chen said traders are “trying to play down the fundamental flaws” in the outlook. She doesn’t expect the Fed to cut rates this year, she said on Bloomberg TV. Chen also warned that while China’s reopening is positive, it will not solve all the problems facing its economy, including problems in the property sector.

New Zealand’s benchmark shares fell and the currency rose after the Labor Party approved Jacinda Ardern’s replacement as prime minister. The new leader, Chris Hipkins, is expected to prioritize the economy as recession looms after a series of sharp interest rate hikes.

Elsewhere, oil fell slightly after hitting its highest level since mid-November on Friday as it capped a second straight week of gains on optimism about increased demand from China. Gold is higher.

Trading in financial markets during Asian hours is likely to be weaker than usual, with major centers including Hong Kong, Shanghai, Singapore and Seoul closed for Lunar New Year celebrations on Monday. Many regional markets will remain closed until midweek, and trading in mainland China will not resume until January 30.

Key events this week:

  • Gains for the week include: Abbott Laboratories, American Airlines, American Express, AT&T, Blackstone, Boeing, Colgate-Palmolive, Freeport-McMoRan, General Electric, Intel, International Business Machines, Johnson & Johnson, LVMH Moet Hennessy Louis Vuitton, Mastercard, Nokia , SAP, Southwest Airlines, Texas Instruments, Verizon Communications, Visa

  • Eurozone consumer confidence, Monday

  • US Conference Board leading index, Monday

  • ECB President Christine Lagarde spoke on Monday

  • US, Eurozone, UK, Japan PMIs Tuesday

  • Richmond Fed Manufacturing, Tuesday

  • ECB President Christine Lagarde spoke on Tuesday

  • US MBA mortgage applications, Philadelphia Federal Reserve non-manufacturing Wednesday

  • Q4 US GDP, New Home Sales, Initial Jobless Claims, Good Trade Balance, Durable Goods, Wholesale Inventories, Retail Inventories Thursday

  • Japan Tokyo CPI, Friday

  • US Personal Income/Expenditure, University of Michigan Consumer Attitudes, Upcoming Home Sales, Friday

Here are some of the main market movements:

Stock up

  • S&P 500 futures were down 0.2% as of 9:52 a.m. in Tokyo. The S&P 500 rose 1.9% on Friday.

  • Nasdaq 100 futures fell 0.2%. The Nasdaq 100 rose 2.9% on Friday

  • Japan’s Topix rose 0.9%

  • Australia’s S&P/ASX 200 index fell 0.1%

Currencies

  • The Bloomberg Dollar Spot Index fell 0.2 percent to 1,222.53

  • The euro rose 0.3% to $1.0886

  • The Japanese yen rose 0.2% to 129.30 per dollar

  • The Australian dollar rose 0.3% to $0.6985

Bonds

  • The 10-year Treasury yield was little changed at 3.48%

  • Japan’s 10-year bond yield was flat at 0.40%

  • Australia’s 10-year bond yield rose five basis points to 3.45%

Goods

  • West Texas Intermediate crude fell 0.3% to $81.37 a barrel

  • Spot gold rose 0.3% to $1,932.29 an ounce

This story was created using Bloomberg Automation.

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