Amanda Cooper
LONDON (Reuters) – Global shares suffered their first monthly losses in six months on Tuesday ahead of a slew of economic data, earnings and a U.S. Federal Reserve meeting, while the yen weakened a day after proposed intervention lifted it from 34- summer level. minimums.
The MSCI All-World index was up 0.1% on the final day, helped by gains in Europe and some positive momentum following a rally on Wall Street the previous day. But the index will lose 2.2% in April, its worst monthly performance since October.
In Europe, investors digested earnings from some of the region’s biggest companies, including lenders HSBC, whose chief executive unexpectedly announced his retirement, and Santander (BME:), as well as consumer heavyweights such as Adidas (OTC:) and airlines such like Lufthansa. .
On the earnings front, Apple (NASDAQ:) will be in focus when it reports first-quarter earnings after the market closes.
The results are competing with macroeconomic data to be the biggest catalyst for the broader market, with the all-important US jobs report due out this week as well as the results of the Fed’s two-day policy meeting on Wednesday.
Right now, the Japanese yen is in focus after Monday’s sudden rise from a new 34-year low of 160.245, with traders citing government intervention in yen buying.
Markets had expected Japan might intervene to support the yen after the currency fell more than 10% against the dollar this year.
The yen came under renewed pressure on Tuesday, pushing the dollar up 0.35% to 156.87 per dollar.
remove advertising
.
Japan’s top currency diplomat Masato Kanda said on Tuesday that authorities were prepared to deal with currency issues around the clock, but declined to comment again on whether the Finance Ministry had intervened a day earlier.
“We are ready 24 hours a day, so it doesn’t matter whether it’s London, New York or Wellington (clock),” the finance vice minister for international affairs told reporters.
ELIMINATE THE YIELD DIFFERENCE
Vasu Menon, managing director of investment strategy at OCBC, said intervention alone could not close the interest rate gap, which is largely responsible for the yen’s fall.
The yen came under pressure as interest rates in the US rose and remained near zero in Japan, leading to a flow of money out of the yen and into higher-yielding assets.
“Much now depends on the outcome of the Fed’s policy meeting this week,” Menon said.
Investors have consistently had to lower expectations about the timing and size of U.S. rate cuts this year following hotter-than-expected inflation reports, with markets pricing in a 57% chance of a rate cut in September, the CME FedWatch Tool showed.
“Either you believe that the inflation fundamentals indicate a structural recovery in inflation, or, more importantly, the first quarter was a failure and things will go back to landing mode,” Lombard Odier economist Sami Chaar said, adding that this second scenario was his base. deal right now.
“Inflation will be the judge and jury of what the Fed does.”
Traders are now pricing in a 35 basis point cut in 2024, well below the 150 basis point cut projected at the start of the year.
remove advertising
.
Changing US rate expectations sent Treasury yields and the dollar higher, dominating the foreign exchange market. Against a basket of currencies, the dollar rose 0.2% to 105.9. The index rose more than 1% in April and is up more than 4% this year.
Meanwhile, stock index and Nasdaq futures fell 0.1%, indicating some weakness at the late open.
US stocks ended higher overnight, helped by a sharp rise in Tesla (NASDAQ:) shares after the electric vehicle maker made progress in winning regulatory approval to launch its cutting-edge driver assistance program in China.
Oil prices remained largely stable. Futures were unchanged at $82.73 a barrel, down from $88.41.
The price was last down 0.9% at $2,314 an ounce.