By Tom Westbrook
SINGAPORE (Reuters) – Asian stocks rose in a mixed session on Thursday as the dollar took a breather and bond markets steadied as investors paused to assess the interest rate outlook.
Oil posted its sharpest decline in two and a half months on demand concerns and the lack, so far, of an obvious Israeli or U.S. response to the weekend’s Iranian attack. [O/R]
Analysts do not expect dramatic new sanctions on Iranian oil, even as the United States was poised to reimpose oil sanctions on Venezuela, which stabilized futures at $87.37 a barrel after falling $2.70 a barrel in Wednesday.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%, but regional movements were uneven, with gains in South Korea and Australia but declines elsewhere. fell 0.4% and with a decline of 4.3% so far this week is posting its biggest weekly loss since December 2022.
Wall Street indexes fell overnight and remained stable in early Asian trading. The dollar fell slightly overnight and news of an unusual trilateral agreement between the United States, Japan and Korea to consult closely on foreign exchange left the door open for interventions to slow the dollar’s gains in Asia.
Short-term interest rate expectations in the United States remained little changed, but selling of longer-dated bonds eased, and 10-year U.S. Treasury yields fell 7.2 basis points to 4 .59% and two-year yields fell after hitting 5%.
“I think these are small pullbacks from prolonged moves,” said Anshul Sidher, global head of markets at ANZ in Singapore, adding that traders are watching bonds and the dollar closely to guide sentiment.
“I would expect (oil) to be subject to (Middle East) escalation from where we are now,” he said.
Australian shares looked set to post five straight sessions of losses with a 0.5% gain just before midday in Sydney. Lower-than-expected earnings from chip supplier ASML (AS:) pushed shares lower on Wednesday, and on Thursday the focus will be on earnings from Taiwan Semiconductor Manufacturing Co. TSMC shares fell 1% in early trading .
DOLLAR PAUSE
Stock market nerves follow a wave of bond selling and dollar buying, while sticky U.S. inflation and a change in tone at the Federal Reserve have pointed to persistently high U.S. rates. The rate-sensitive Nasdaq fell 3% this week.
The euro is under pressure as European politicians are set to cut rates in two months, although at $1.0665 it is far from this week’s five-month lows.
The Australian dollar suffered a slight setback to $0.6435 on data showing an unexpected drop in Australian employment in March.
The yen traded at 154.22 per dollar, near a three-decade low, and traders are eyeing a breach of 155 as a possible trigger for intervention. [FRX/]
“China will likely welcome the end of the yen’s depreciation,” Bank of Singapore strategist Moh Siong Sim said in a note to clients.
“We believe the question of whether Japan will intervene to limit yen weakness will be important to the People’s Bank of China’s assessment of the appropriate level to stabilize the (yuan).”
it fluctuated at 7.2369 per dollar. It has fallen 1.8% against the dollar this year, and the weakening of its trading range this week has been interpreted as a sign that Chinese authorities will tolerate further weakness. [CNY/]
Elsewhere in commodity markets, European gas prices fell from three-month highs and strong rallies in metal prices stalled, although they did not reverse.
The London quarter is up 12% this year and traded at $9,584 per tonne overnight. Singapore iron ore posted gains to just over $110 a tonne. [MET/L]
Gold is just below last week’s record high of $2,366 an ounce. [GOL/]
A handful of U.S. and European central bankers will speak later Thursday. US jobless claims data is incoming, and Blackstone (NYSE:) and Netflix (NASDAQ:) earnings will be watched closely.