SYDNEY, June 21 (Reuters) – Asian shares are ending the
week with a whimper after a recent rally to 26-month highs drew
profit-taking, while the relentless strength in the U.S. dollar
pushed the Japanese yen towards the intervention zone.
Europe is set for a flat open, having bounced a day earlier
as rate cuts there gathered pace. Both EUROSTOXX 50 futures
and FTSE were little changed but S&P 500
futures rose 0.1% and Nasdaq futures gained 0.2%.
Overnight, the Swiss National Bank cut rates for a second
time while the Bank of England opened the door to an easing in
August after holding rates steady. Sterling, the Swiss franc and
the euro fell, lifting the dollar broadly.
MSCI’s broadest index of Asia-Pacific shares outside Japan
fell 0.6% on Friday, dragged lower by a
pull-back in technology shares, tracking a mixed session on Wall
Street overnight.
The index is set for a weekly gain of 0.9% after rising to
its highest since April 2022 on Wednesday as a recent run of
soft U.S. data reinforced bets of two rate cuts from the Federal
Reserve to come this year.
“We’re seeing more and more of these central banks either
open the door or continue cutting rates and that’s a really good
thing, particularly as we’re starting to see some softer data
consistently come out of the U.S.,” said Tony Sycamore, analyst
at IG.
“But in the short term, I think we should look for more
of these end-of-month, end-of-quarter flows. In the medium term,
I think the market will continue to back those tech and AI
winners.”
Japan’s Nikkei was off 0.1% and the yen
remained jittery at 158.91, levels not seen since late April
when the Japanese authorities intervened in the market to stem
the currency’s fast declines.
Data showed earlier in the day that Japan’s demand-led
inflation slowed in May, complicating the outlook for interest
rate hikes.
Chinese stocks fell slightly, with the Shanghai Composite
index struggling to stand above a critical level of
3,000 points. The index is 0.1% lower, having skidded 5.6% since
a recent multi-month high in late May.
Hong Kong’s Hang Seng index tumbled 1.7%, extending
the weakness seen over the past month.
In foreign exchange markets, the euro clawed back
some lost ground and was last up 0.2% at losses at $1.0718,
while sterling had less luck and was pinned at $1.2662,
the lowest in five weeks.
The dollar also held gains against the Swiss franc at
0.8910 francs, having jumped 0.8% overnight.
In contrast, a still hawkish rate outlook for Australia’s
central bank has sent the local dollar up a whopping 1.8% this
week to a 17-year high on the low-yielding yen.
Treasuries are set to end the week on the back foot.
Two-year yields are headed for a weekly rise of 6
basis points to 4.7407%, while the 10-year yield
also rose 5 bps to 4.2593%.
Oil prices consolidated on Friday after hitting seven-week
highs earlier in the week. Brent futures slipped 0.1% to
$85.59 a barrel while U.S. crude also dipped 0.1% to
$81.19 a barrel.
Gold prices edged up 0.1% to $2,362.20 per ounce.
(Reporting by Stella Qiu; Editing by Christian Schmollinger and
Stephen Coates)
