Yen Reverses Losses; European Stock Futures Rise: Markets Wrap

(Bloomberg) — The yen rebounded sharply after dropping to its lowest in 34 years, spurring speculation that authorities may have intervened. European and US stock futures rose to track a positive session in Asia.

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The Japanese currency extended gains to as much as 2.1% after earlier falling past 160 per dollar for the first time since 1990. Thin liquidity due to a public holiday in the country was also cited as a reason for the volatile moves. Top currency official Masato Kanda said “no comment for now” when asked by reporters whether or not he intervened.

“The market is very jumpy and with not a lot of liquidity, the yen becomes a sharp toy to play with,” said Rodrigo Catril, a strategist at National Australia Bank. “The risk of intervention is an added factor.”

The Euro Stoxx 50 futures rose 0.4%, while contracts for the S&P 500 advanced slightly less after the US benchmark notched it best weekly gain in 2024.

Chinese stocks led Asia’s rally, adding to signs of a revival in the once-battered market amid a return in foreign money and an improvement in earnings. The Hang Seng Index trimmed gains after rallying toward a technical bull market. Property shares surged after major developer CIFI Holdings Group Co. reached a solution with bondholders on its liquidity issues.

Traders will also be focusing on the Federal Reserve’s policy meeting on Wednesday after the central bank’s preferred measure of inflation rose at a brisk pace in March, though roughly in line with estimates. With officials likely to hold rates steady at a more than two-decade high, interest will be on any pivot in the tone of the post-meeting statement and Chair Jerome Powell’s press conference.

“With all measures of US consumer prices showing a steep acceleration over the past three to four months, the FOMC is bound to row back hard from its earlier predictions of meaningful policy easing this year,” Societe Generale economists including Klaus Baader wrote in a note to clients. “That said, markets have already scaled back pricing of rate cuts drastically, so unless Chair Powell plays up the possibility of rate hikes, the market damage is likely to be modest.”

A gauge of US Treasury returns has slumped 2.3% this month, set for the biggest monthly drop since February last year, as hawkish Fedspeak and strong economic data pushed back rate-cut bets. Swaps traders now see only one Fed reduction for all of 2024, well below the roughly six quarter-point cuts they expected at the start of 2024.

Read More: 60,000 Headlines Show Powell’s Hawkish Pivot Has Just Begun

Oil fell and gold edged lower in Asian trading as US Secretary of State Antony Blinken steps up efforts to secure a truce in Gaza in meetings in the Middle East on Monday, in what could be a final chance to persuade Israel to call off an attack on Rafah.

In corporate news, Elon Musk made an unannounced trip to China on Sunday. The surprise visit appears to have paid immediate dividends, with Tesla Inc. clearing two key hurdles to introduce its driver-assistance system to the world’s biggest auto market.

Separately, L’Occitane International SA’s billionaire owner Reinold Geiger is close to making an offer to take the skin-care company private, according to people familiar with the matter.

Some key events this week:

• All four Chinese megabanks report first-quarter earnings, Monday

• Germany CPI, Monday

• Eurozone economic confidence, consumer confidence, Monday

• Australia retail sales, Tuesday

• China Caixin manufacturing PMI, non-manufacturing PMI, manufacturing PMI, Tuesday

• Japan unemployment, industrial production, retail sales, Tuesday

• Eurozone CPI, GDP, Tuesday

• Colombia rate decision, Tuesday

• Amazon earnings, Tuesday

• New Zealand unemployment, Wednesday

• UK S&P Global / CIPS Manufacturing PMI, Wednesday

• US rate decision, Wednesday

• Indonesia CPI, Thursday

• South Korea CPI, S&P Global Manufacturing PMI, Thursday

• Eurozone S&P Global Manufacturing PMI, Thursday

• Apple earnings, Thursday

• Eurozone unemployment, Friday

• Norway rate decision, Friday

• US unemployment, nonfarm payrolls, ISM Services, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures rose 0.3% as of 6:40 a.m. London time

• Nikkei 225 futures (OSE) rose 1.6%

• Australia’s S&P/ASX 200 rose 0.9%

• Hong Kong’s Hang Seng rose 1.1%

• The Shanghai Composite rose 0.8%

• Euro Stoxx 50 futures rose 0.4%

• Nasdaq 100 futures rose 0.4%

Currencies

• The Bloomberg Dollar Spot Index fell 0.3%

• The euro rose 0.3% to $1.0727

• The Japanese yen rose 1.3% to 156.31 per dollar

• The offshore yuan rose 0.2% to 7.2558 per dollar

• The Australian dollar rose 0.6% to $0.6572

• The British pound rose 0.4% to $1.2542

Cryptocurrencies

• Bitcoin fell 2.1% to $62,308.76

• Ether fell 3.5% to $3,194.54

Bonds

• The yield on 10-year Treasuries declined four basis points to 4.66%

• Japan’s 10-year yield advanced 3.5 basis points to 0.925%

• Australia’s 10-year yield declined four basis points to 4.48%

Commodities

• West Texas Intermediate crude fell 0.7% to $83.23 a barrel

• Spot gold fell 0.2% to $2,332.48 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Matthew Burgess.

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