Kevin Buckland
TOKYO (Reuters) – Asian stocks lacked direction on Wednesday, with the dollar firming despite lower U.S. Treasury yields as markets assessed mixed signals from U.S. policymakers and economic data on the Federal Reserve’s interest rate path.
The yen remains on the back foot despite threats of currency intervention by Japanese authorities to support the yen.
Crude oil prices hovered near two-month lows on signs of easing supply pressures and continued hopes for a ceasefire in the Middle East.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.19%, partly due to losses in blue-chip stocks in mainland China. However, Hong Kong stocks rose 0.52%.
It fell about 1% as traders took profits after rising 1.6% in the previous session. The tech-heavy index also succumbed to pressure from a selloff in U.S. chip stocks on Tuesday.
U.S. stock futures were flat.
The yen fell 0.16% to 154.94 against the dollar despite Japanese Finance Minister Shunichi Suzuki expressing deep concern about the negative impact of currency weakness and reiterating readiness to deal with excessive volatility.
The gauge gained 0.09% against the yen, euro, pound and three other major currencies at 105.51, after rising 0.3% on Tuesday.
The euro fell slightly by 0.12% to $1.07325, and the pound fell by 0.14% to $1.24915.
Minneapolis Federal Reserve President Neel Kashkari said on Tuesday that the central bank may need to abandon interest rate cuts this year because of stubborn inflation.
Last week, Fed Chairman Jerome Powell said the wait to ease policy was taking longer than expected, but signaled he was still leaning toward a rate cut.
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While prices have been sticky, Friday’s monthly jobs data showed some signs of softening in the labor market. Consumer price data in a week’s time will be closely watched.
“The debate within markets and among policymakers over the appropriate level of interest rates continues,” Kyle Rodda, senior financial markets analyst at Capital.com, wrote in a note.
“The lack of major U.S. economic data in the coming days (means) there is little to orient or react to,” he added. “Currently, the market believes that the possibility of two interest rate cuts in the United States this year is slightly higher, and the first rate cut will be fully completed in November.”
Long-term U.S. Treasury yields were at 4.4651% in Asian trading after falling to a nearly one-month low of 4.42% on Tuesday.
Gold prices fell 0.16% to near $2,310 an ounce.
Crude oil extended Tuesday’s losses after data from the American Petroleum Institute later released showed a sharp build in fuel inventories last week, a sign of falling demand, market sources said.
Meanwhile, the United States believes ceasefire negotiations in Gaza should narrow the differences between Israel and Hamas, thereby reducing the risk of supply disruptions.
Futures fell 32 cents, or 0.38%, to $82.84 a barrel. U.S. West Texas Intermediate crude oil futures fell 28 cents, or 0.36%, to $78.10 a barrel.
