Asia stocks bounce as soaring dollar pauses
SINGAPORE: Asian stocks made their biggest gains in a month on Thursday, while the dollar took a breather and bond markets steadied as investors stepped back to assess the interest rate outlook.
Oil found support following its sharpest fall in two-and-a-half months on demand worries and the lack, so far, of an obvious Israeli or US response to Iran’s weekend attack on Israel.
Analysts do not expect dramatic new sanctions on oil from Iran, which comprises about 3 per cent of global output.
MSCI’S broadest index of Asia-pacific shares outside Japan rose 1 per cent, led by a 2 per cent gain in South Korea’s Kospi and a 1 per cent rise for Hong Kong’s Hang Seng. All of those indexes are down for the week and for the month so far.
Japan’s Nikkei rose 0.3 per cent, though its drop of 3.6 per cent for the week has it eyeing its biggest weekly fall since 2022.
S&P 500 futures bounced 0.4 per cent, Nasdaq 100 futures rose 0.5 per cent, FTSE futures rose 0.3 per cent, while European futures were flat.
The dollar has eased from recent highs, and news of an unusual trilateral agreement between the US, Japan and Korea to consult closely on foreign exchange left the door open to intervention to slow any further dollar gains in Asia.
US short-term interest rate expectations were little changed, but selling of longer-dated bonds abated, and Asia’s bond markets rallied on Thursday.
Ten-year Japanese government bond yields fell 2 basis points to 0.86 per cent. Ten-year Treasury yields fell 1.6 bps to 4.569 per cent, and two-year Treasury yields, which touched 5 per cent on Thursday, were last at 4.92 per cent.
“I believe (falls in yields and the dollar) are small pullbacks from extended moves,” said Anshul Sidher, global head of markets at ANZ in Singapore, adding traders are closely watching bonds and the dollar to drive the mood. “I’d expect (oil) to be range-bound subject to (Middle East) escalations from where we are now,” he said.
Taiwanese chipmaker TSMC turned in a positive surprise, beating market estimates with a 9 per cent rise in profit as it rides a wave of artificial intelligenceled demand. It expects business to pick up in the second half, and the result contrasted with Wednesday’s disappointing earnings from chipmaking supplier ASML. —