Ankur Banerjee
SINGAPORE (Reuters) – Asian stocks rose on Wednesday, tracking Wall Street as shares in electric car maker Tesla (NASDAQ:) rose after the close on promises of new models and upbeat earnings from some U.S. companies boosted risk appetite.
The yen strengthened near 34-year lows, prompting traders to fear possible intervention from Tokyo.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.55%, up 1% on Tuesday as shares recovered from a sharp selloff last week. grew by 2%.
Chinese shares were mixed, with the blue-chip index unchanged, while Hong Kong shares added 1.6%.
Tesla kicked off earnings season for U.S. tech companies by announcing new electric vehicle models, sending its shares up 12% in extended trading.
US stocks closed higher on Tuesday as companies such as automaker General Motors (NYSE:) reported strong earnings. E-mini futures rose 0.27%. [.N]
The earnings-heavy week included results from tech giants Meta Platforms (NASDAQ:), Alphabet (NASDAQ:) and Microsoft (NASDAQ:), and is likely to set the tone for the near term.
“There are also upcoming earnings from major US tech companies such as Meta, which will potentially keep the tech sector positive ahead of these releases,” said Anderson Alves, a trader at ActivTrades.
Beyond corporate earnings, traders are focusing on U.S. gross domestic product and March personal consumption spending data, the Fed’s preferred inflation gauge, due later this week to gauge how U.S. rates are moving.
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Markets are currently pricing September as the day the Federal Reserve will make its first rate cut, with rates expected to cut by 43 basis points this year. At the beginning of the year, traders assumed an easing of 150 bps. for the whole year.
The sharp shift has lifted Treasury yields and the dollar over the past few weeks, but they were subdued on Wednesday after data showed U.S. business activity fell to a four-month low in April due to weaker demand, while the pace inflation even decreased slightly. as raw material prices have risen sharply.
“The surprisingly soft PMI numbers suggest the US economy will lose some momentum in the second quarter,” said Tony Sycamore, market strategist at IG.
Bond yields stood at 4.613% on Wednesday, falling to 4.568% on Tuesday following economic data.
The index, which measures the U.S. currency against six peers, was down 0.066% at 105.60, after falling 0.424% on Tuesday. [FRX/]
YEN IN THE INTERVENTION ZONE
The Japanese yen last traded at 154.79 per dollar, close to the 34-year low of 154.88 it hit on Tuesday ahead of the Bank of Japan’s two-day policy meeting, which ends on Friday.
The dollar/yen pair, which is extremely sensitive to US bond yields, is trading in an extremely tight range, with traders wary that a rise above 155 could raise the risk of dollar selling intervention by Japanese officials.
Japanese Finance Minister Shunichi Suzuki issued his strongest warning to date on Tuesday about the likelihood of intervention, saying a meeting last week with US and South Korean counterparts laid the groundwork for Tokyo to act against the yen’s excessive movements.
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The United States, Japan and South Korea agreed to “consult closely” on currency markets during their first trilateral financial dialogue last week, acknowledging concerns from Tokyo and Seoul over recent sharp falls in their currencies.
Japan last intervened in the foreign exchange market in 2022, first in September and then in October to support the yen.
IG’s Sycamore said that if core U.S. PCE inflation is higher than expected, “the market will quickly take advantage of the favorable yield backdrop and push the pair towards 156.00.”
fell 0.1% to $83.28 a barrel to $88.31, down 0.12% on the day. Oil prices rose on Tuesday as investors’ focus shifted away from tensions in the Middle East. [O/R]
fell 0.2% to $2,317.39 an ounce. [GOL/]