Ankur Banerjee
SINGAPORE (Reuters) – Asian stocks fell and the dollar rose to a more than five-month high on Tuesday as stronger-than-expected U.S. retail sales in March further fueled expectations that the Federal Reserve is unlikely to rush into a tapering move. interest rates. this year.
Rising geopolitical tensions have kept a lid on risk appetite, lifting gold and oil prices, while investors’ attention in Asia turns to China, where GDP data will be released at 0200 GMT.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4% to a nearly seven-week low of 521.92, down 1.6%.
US stocks closed sharply lower on Monday as a jump in Treasury yields weighed on sentiment amid concerns about rising tensions between Iran and Israel. [.N]
Israelis were waiting to hear how Prime Minister Benjamin Netanyahu would respond to Iran’s first-ever direct attack on their country. Netanyahu on Monday convened his war cabinet for the second time in less than 24 hours to weigh a response to Iran’s missile and drone attack over the weekend, a government source said.
“Markets have come to life on the sound of de-risking, deleveraging, hedging and broad risk management,” said Chris Weston, head of research at Pepperstone.
“Of course, there is little in the news cycle to inspire risk-taking, and there is a growing list of factors to avoid buying and managing risk.”
U.S. retail sales rose 0.7% last month, the Commerce Department’s Census Bureau said on Monday, while economists polled by Reuters forecast retail sales, which are mostly goods and do not take into account inflation, would rise. by 0.3%.
The stronger-than-expected data came after a report last week highlighted that inflation remained more resilient than markets had expected, leading to a sharp reduction in rate cuts this year.
Traders now expect a 45 basis point rate cut this year, down from more than 160 basis points. with expected easing at the beginning of the year. Markets are now pricing in September, rather than June, as the starting point for rate cuts, according to the CME FedWatch Tool.
Bond yields stood at 4.608% in Asian hours, rising to a five-month high of 4.663% on Monday. [US/]
Higher yields strengthened the dollar and kept the yen near the 34-year lows it had been at over the past few days. [FRX/]
The index, which measures the U.S. currency against six peers, rose 0.028% to 106.23, up 0.189% overnight. The yen weakened to 154.39, raising fresh concerns about intervention and comments from officials.
Japanese Finance Minister Shunichi Suzuki said on Tuesday he was closely monitoring the currency’s movements and would provide a “thorough response as needed” after the dollar surged to a new 34-year high.
Carol Kong, currency strategist at the Commonwealth Bank of Australia (OTC), said high oil prices and expectations of higher and longer-term US interest rates were supporting the dollar against the yen.
“The dollar/yen rate is still at risk of a sharp pullback if the Ministry of Finance decides to enter the foreign exchange markets and buy JPY. our view.”
All eyes during Asian trading will be on China’s GDP, as well as data on industrial activity, fixed investment, retail sales and the real estate market.
“The property market has not yet confirmed a bottom and markets will be closely monitoring price data for any signs of stabilization; a bottom in house prices would be a positive sign of recovery in sentiment,” ING economists said.
Commodity prices rose 0.63% to $85.95 a barrel at $90.63, up 0.59% on the day as tensions in the Middle East rose. [O/R]
added 0.1% to $2,385.88 an ounce. [GOL/]