Yen Strengthens on Dollar as US Bond Yields Fall: Markets Wrap

A stronger yen weakened Japanese equity futures Thursday after a rally in Treasuries weighed on yields and the dollar. US stocks fell ahead of the Thanksgiving holiday.

Contracts for Japanese shares fell 0.8%, while those for Australia and Hong Kong were slightly higher. The S&P 500 fell 0.4% after touching a record high in the prior session, while the Nasdaq 100 dropped 0.9% as tech stocks weighed on the US market. Nvidia Corp. and Tesla Inc. were among the hardest hit big-tech companies.

Shares in Microsoft Corp. fell after the US Federal Trade Commission opened an antitrust investigation of Microsoft Corp., drilling into everything from the company’s cloud computing and software licensing businesses to cybersecurity offerings and artificial intelligence products.

In a thin trading session ahead of the holiday, data showed the Fed’s preferred measure of underlying inflation picked up. While in-line with estimates, the core personal consumption expenditures climbed 2.8% from October last year. Separate figures showed the economy expanded at a solid pace. 

The data support recent comments by many Fed officials that there’s no rush to cut rates as long as the labor market remains healthy and the US continues to power ahead. 

“The last mile towards price stability has been stymied by still ‘sticky’ inflation and bumps along road,” said Quincy Krosby at LPL Financial.

Selling in US stocks was accompanied by buying in Treasuries as investors sought the safety of US government debt. That pushed the 10-year yield as low as 4.22% on Wednesday, a level not seen in a month. Australian and New Zealand yields fell early Thursday, echoing the move.

Lower Treasury yields weakened an index of the dollar, which fell 0.7%. The yen was steady early Thursday after climbing more than 1% against the greenback Wednesday to trade at its strongest since late October. 

In Asia, data set for release includes ANZ business confidence for New Zealand and Sri Lanka trade. The Reserve Bank of Australia’s Governor Michelle Bullock will speak later in the day.

The Bank of Korea is anticipated to hold rates at 3.25%, pausing its policy moves after the first cut in over four years last month.

Investors will also be on the lookout for further moves in Chinese equities after a Wednesday rally on speculation that a key economic meeting expected next month may lead to more stimulus. The Golden Dragon index of US-listed Chinese companies jumped 2.8%.

Tech Shares

US stocks have extended their outperformance against international peers this year, powered by tech shares and the artificial intelligence frenzy, while the economy remains resilient.

The S&P 500 has climbed over 25% in 2024, making numerous record highs and largely outpacing the MSCI World Ex-USA Index. The valuation gap has also widened, with US stocks now trading at a record 60% premium to international peers based on forward price-to-earnings ratios.

Elsewhere, BlackRock Inc., Vanguard Group Inc. and State Street Corp. were sued by a group of states led by Texas for allegedly breaking antitrust law by boosting electricity prices through their investments.

In commodities, oil steadied as OPEC was expected to delay a production restart. Gold eked out small gains. Meanwhile, Bitcoin climbed back toward the elusive $100,000 price level again.

Key events this week:

Some of the main moves in markets:

Stocks

Currencies

Cryptocurrencies

Bonds

Commodities

This story was produced with the assistance of Bloomberg Automation.

This article was generated from an automated news agency feed without modifications to text.