(Bloomberg) — Asian equities edged lower amid a lack of positive drivers, while the the yen was on the front foot following potentially hawkish remarks by the Bank of Japan governor.
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Shares in Hong Kong fell as trading resumed after a closure on Friday due to a heavy rainstorm. Equities in mainland China climbed to snap a four-day loss, with easing deflationary pressure and a report on more cities relaxing mortgage rules helping stabilize sentiment.
Japanese stocks pared their gains after BOJ Governor Kazuo Ueda’s comment on negative interest rates boosted bank shares. US stock futures were flat following small moves in shares at the end of the week, with the S&P 500 edging higher after a three-day drop.
The yen strengthened 0.7% against the greenback and yield on the government’s 10-year bond jumped to the highest since 2014 after Ueda told the Yomiuri newspaper there may be sufficient information by year-end to judge if wages will continue to rise, which is a key factor in deciding whether or not to end its super-easy policy. While this fueled speculation that negative rates and yield-curve control are drawing near a close, the central bank chief also said the BOJ is some distance away from achieving its price stability target.
China’s yuan gained as much as 0.5% in onshore trading following the central bank’s stronger-than-expected yuan fix.
Ueda’s hawkish comments may be intended to keep yen depreciation in check, Naomi Muguruma, chief fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo, wrote in a note.
Offering Spree
Borrowers in Asia extended a recent global corporate bond offering spree at the start of the week. At least three firms were marketing dollar notes Monday, while two others had hired banks for potential deals.
Treasuries ticked lower across tenors, while the dollar fell against all of its Group-of-10 counterparts after its recent rally drove the currency to a record streak of weekly gains. The greenback has been bolstered recently by bets the Federal Reserve will keep interest rates higher for longer as the US defies a global economic gloom.
The Bloomberg Dollar Spot Index capped its eighth weekly gain on Friday, the longest such run since 2005. The advance sent its 14-day Relative Strength Index above 70 — which is seen by some on Wall Street as a sign of an overbought market.
Treasury Secretary Janet Yellen said she’s increasingly confident that the US will be able to contain inflation without major damage to the job market, hailing data showing a steady slowdown in inflation and a fresh influx of job seekers.
A key data to help investors gauge the Fed’s next move is US inflation that will come out later this week.
“We saw a slight uptick in CPI in August, but I would anticipate it to be relatively flat in September,” Shana Sissel, Banrion Capital Management CEO, said on Bloomberg Television. With some weakness also in the job market, “the Fed will likely pause in September as they wait to see what happens with the data through the month of September,” she said.
Elsewhere, oil declined after a two-week rally and gold was little changed.
Key events this week
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UK jobless claims, unemployment, Tuesday
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Eurozone industrial production, Wednesday
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UK industrial production, Wednesday
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US CPI, Wednesday
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Eurozone ECB rate decision, Thursday
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Japan industrial production, Thursday
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US retail sales, PPI, business inventories, initial jobless claims, Thursday
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China property prices, retail sales, industrial production, Friday
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US industrial production, University of Michigan consumer sentiment, Empire Manufacturing index, Friday
Some of the main moves in markets:
Stocks
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S&P 500 futures were little changed as of 10:35 a.m. Tokyo time. The S&P 500 rose 0.2% on Friday
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Nasdaq 100 futures were little changed. The Nasdaq 100 rose 0.1%
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Japan’s Topix index fell 0.1%
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Hong Kong’s Hang Seng Index fell 1.8%
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China’s Shanghai Composite Index was little changed
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Australia’s S&P/ASX 200 Index fell 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.2% to $1.0719
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The Japanese yen rose 0.7% to 146.80 per dollar
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The offshore yuan rose 0.3% to 7.3407 per dollar
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The Australian dollar rose 0.4% to $0.6402
Cryptocurrencies
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Bitcoin fell 0.5% to $25,688.45
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Ether fell 0.7% to $1,608.06
Bonds
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The yield on 10-year Treasuries advanced two basis points to 4.29%
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Japan’s 10-year yield advanced five basis points to 0.700%
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Australia’s 10-year yield advanced eight basis points to 4.16%
Commodities
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West Texas Intermediate crude fell 0.8% to $86.83 a barrel
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Spot gold rose 0.1% to $1,921.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Brett Miller and Masaki Kondo.
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