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Global equity/currency market update: Asia stocks, yen tentative with eyes on BOJ decision

26 Apr 2024 8:57 am
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Mumbai, 26 Apr (Commoditiescontrol): Asian shares rose cautiously on Friday as markets sobered up to the idea that U.S. rate cuts were most likely some time away, while the yen and Japanese government bonds struggled ahead of a closely watched policy decision by the Bank of Japan.

U.S. stock futures jumped after tech giants Alphabet and Microsoft reported quarterly results that beat Wall Street estimates. Nasdaq futures advanced more than 1%, while S&P 500 futures rose 0.7%.

The highlight of the Asia day was on the BOJ's rate decision at the conclusion of its two-day monetary policy meeting, as well as Governor Kazuo Ueda's news conference thereafter.

Ahead of the outcome, the yen languished near a 34-year low and was little changed at 155.62 per dollar, while the 10-year JGB yield rose to a five-month high of 0.93%.

Other yields across the curve also notched fresh milestones, with some hitting multi-year peaks. Bond yields move inversely to prices.

Although expectations are for the BOJ to maintain its accommodative monetary policy stance, focus will be on whether the central bank makes any adjustments to its bond buying amounts – seen as a way to deliver a more hawkish stance without an outright rate rise.

That comes as the yen has been battered by a resurgent dollar, even after the BOJ's landmark exit from negative rates last month. Aggressive jawboning from Japanese authorities has also done little to stem the yen's decline, leaving traders on alert for any signs of intervention from Tokyo.

Complicating matters for the BOJ, data on Friday showed core inflation in Tokyo slowed much more than expected in April and fell below the central bank's 2% target.

In stocks, Japan's Nikkei edged a marginal 0.02% higher. MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.27%, while Australia's S&P/ASX 200 index fell more than 1%.

Shares of BHP Group fell 4% in the first day of trading of its Australian-listed stock since revealing a $38.8 billion bid for smaller rival Anglo American in a deal that would forge the world's largest copper miner.

Hong Kong's Hang Seng Index gained 0.3%.

Elsewhere, investors were digesting the implications of Thursday's data which showed the U.S. economy grew at its slowest pace in nearly two years in the first quarter, though inflation accelerated. That reinforced expectations that the Federal Reserve would not cut interest rates before September.

U.S. Treasury yields surged to five-month highs in the previous session and remained elevated in Asia. US/ The two-year yield hovered near the 5% level, while the benchmark 10-year yield steadied at 4.7019%.

The dollar, however, slipped on the back of the weaker U.S. growth, and was nursing some of those losses on Friday.

Sterling dipped 0.09% to $1.2502 after touching a two-week high on Thursday, while the euro edged 0.04% lower to $1.0726. FRX Focus now turns to March's core PCE price index data due later on Friday – the Fed's preferred measure of inflation – for further clues on the U.S. rate outlook.

In commodities, Brent rose 0.38% to $89.35 a barrel, while U.S. crude gained 0.35% to $83.86 per barrel. Gold eased 0.08% to $2,329.50 an ounce.

(By Commoditiescontrol Bureau: 09820130172)

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