© Reuters. FILE PHOTO: Japanese yen banknotes are seen in this illustrative image taken September 23, 2022. REUTERS/Florence Lo/Illustration/File Photo
By Tom Westbrook
SINGAPORE (Reuters) – Asian stock markets struggled to advance on Thursday as weak U.S. consumer data stoked concerns about a recession and pushed investors towards safe haven assets such as bonds, while the Japanese yen It rose as markets doubted the Bank of Japan’s policy commitments.
The broader MSCI index of Asia-Pacific stocks outside of Japan fell 0.8% and benchmark 10-year US Treasury yields, which fall when prices rise, hit their lowest level since September at 3. 66% futures fell 1%.
it also fell 1% and the yen rose 0.4% to 128.45 per dollar, reversing the moves that followed as the Bank of Japan (BOJ) ruled out speculation of a change and leaving monetary policy settings unchanged a day before.
The BOJ has sought ultra-loose policy tightening for decades in a bid to fuel inflation and growth, but markets doubt it can stay that way, and traders have been selling Japanese government bonds and buying yen to bet on a turnaround.
The fall of the Nikkei and the rebound of the yen suggest that such speculation is here to stay, at least for now.
“There is a lot of speculation in the market that now that the January (BOJ) meeting has gone ahead without any changes… we will see something in March,” said Shafali Sachdev, head of FX, fixed income and commodities. in Asia at BNP Paribas (OTC:) Wealth Management in Singapore.
April was another possibility, he added, since by then the BOJ would have a new governor. “I assume more speculators would look to build positions at these meetings.”
Ten-year Japanese government bonds, the focus of markets’ challenge to the BOJ because of the zero-yield target and 0.5 percentage point cap on their move higher, returned 0.415%. (JP/)
RECESSION RISK
Overnight loss of 1.6% after data showed US manufacturing production had plunged last month and retail sales had fallen the most in a year.
it fell 0.2% in Asia and was close to breaking below the 50-day moving average.
“The decline in retail spending and industrial production adds to the theme of the economy slowing and heading for recession in 2023, and pushes back the soft-landing narrative that has dominated markets since January,” said the head of National Australia Bank (OTC:) market economy, Strickland Tapas.
Microsoft’s (NASDAQ:) announcement of 10,000 layoffs and aggressive comments from Cleveland Fed President Loretta Mester and St. Louis Fed President James Bullard added to the pessimism, with both Fed officials the Fed expected US interest rates to be above 5% this year.
The dollar recouped London trading losses in the New York session and gained in Asia. The Australian dollar last fell 0.5% to $0.6907, losing ground after data showed an unexpected drop in Australian employment last month.
The euro was under mild pressure at $1.1078 and the New Zealand dollar was teetering slightly lower on news of Prime Minister Jacinda Ardern’s surprise resignation.
The minutes of last month’s European Central Bank meeting will be released later on Thursday, as will an appearance by ECB President Christine Lagarde at the World Economic Forum in Davos.
