On Thursday, Asian stocks made modest gains amidst a mixed trading session, while the dollar stabilized and bond markets remained steady as investors paused to evaluate the outlook for interest rates.
The recent decline in oil prices, the sharpest in two-and-a-half months, was attributed to concerns over demand and the absence of a clear response from Israel or the U.S. following Iran's weekend attack. Analysts anticipated no significant new sanctions on Iranian oil, but attention turned to the U.S. reimposing oil sanctions on Venezuela, which helped stabilize Brent crude futures at $87.37 a barrel after a notable drop on Wednesday.
MSCI's broadest index of Asia-Pacific shares outside Japan edged up by 0.4%, though regional movements varied, with gains seen in South Korea and Australia while other markets experienced declines. Japan's Nikkei fell by 0.4%, marking its largest weekly loss since December 2022 with a drop of 4.3% so far this week.
Overnight, Wall Street indexes experienced declines, and early Asia trade showed flat S&P 500 futures. The dollar saw a slight dip overnight, and news of an unusual trilateral agreement between the U.S., Japan, and Korea to closely consult on foreign exchange hinted at the possibility of intervention to moderate dollar gains in Asia.
Expectations for short-term U.S. interest rates remained largely unchanged, but the selling pressure on longer-dated bonds eased, leading to a 7.2 basis point fall in 10-year U.S. Treasury yields to 4.59%, with two-year yields retracting after briefly touching 5%.
Anshul Sidher, global head of markets at ANZ in Singapore, interpreted these movements as minor corrections from extended trends, with traders closely monitoring bonds and the dollar to gauge market sentiment. He anticipated oil prices to remain range-bound barring any escalations in the Middle East.
Australian stocks appeared poised to break a five-session losing streak, with the ASX 200 up by 0.5% around midday in Sydney. Focus shifted to earnings reports, particularly from Taiwan Semiconductor Manufacturing Co. (TSMC), following weaker-than-expected earnings at chipmaking supplier ASML on Wednesday.
Market jitters persisted amid a recent wave of bond sell-offs and dollar appreciation, fueled by concerns over sticky U.S. inflation and a shift in tone at the Federal Reserve indicating sustained high U.S. rates. The Nasdaq, sensitive to interest rate movements, had declined by 3% so far during the week.
The euro faced pressure amid expectations of rate cuts by European policymakers in the coming months, though it rebounded slightly to $1.0665 from this week's five-month lows. The Australian dollar dipped following unexpected data showing a decline in Australian employment in March.
The yen hovered near a three-decade low at 154.22 per dollar, with traders monitoring the possibility of intervention if it breaches 155. China's yuan remained relatively stable against the dollar, with signs that Chinese authorities may tolerate further softening.
In commodity markets, European gas prices retreated from three-month highs, and the recent surge in metal prices paused but did not reverse. Gold remained just below last week's record high at $2,366 an ounce.
Later in the day, a few U.S. and European central bankers were scheduled to speak, alongside the release of U.S. jobless claims data and closely watched earnings reports from Blackstone and Netflix.
Paraphrasing text from "Investing" all rights reserved by the original author.
