# Asia shares subdued, yen shunned as euro shines Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-06-28 Category: Uncategorized Category URL: https://financedigest.com/category/uncategorized Meta Title: Asia shares subdued, yen shunned as euro shines By Wayne Meta Description: Stay updated with the latest market trends in Asia as shares stall, yen hits a 15-year low, and the euro strengthens. Get insights from top central bankers. URL: https://financedigest.com/asia-shares-subdued-yen-shunned-as-euro-shineshtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-06-28t021711z1lynxmpej5r021rtroptp4japan-yen-banknotes-1736813821002-compressed.jpg) # Asia shares subdued, yen shunned as euro shines By Wayne Cole SYDNEY (Reuters) – Asian shares stalled on Wednesday as surprisingly upbeat U.S. economic news warred with [global growth](https://www.financedigest.com/global-growth-headed-down-as-inflation-surge-to-endure.html "Global growth headed down as inflation surge to endure") concerns, while the embattled yen hit a 15-year low on the euro and Japan hinted at intervention to prevent further losses. The strength of U.S. data also combined with hawkish commentary from the European Central Bank to undermine bonds as markets narrowed the odds on further [rate hikes](https://www.financedigest.com/global-shares-rise-dollar-rebounds-as-fed-seen-on-target-for-rate-hike.html "Global shares rise, dollar rebounds as Fed seen on target for rate hike"). That only heightened attention on a star-studded panel of central bankers later in the day in Portugal which includes Federal Reserve Chair Jerome Powell, [ECB head Christine Lagarde](https://www.financedigest.com/ecbs-lagarde-raises-prospect-of-rate-hikes-beyond-neutral-level.html "ECB’s Lagarde raises prospect of rate hikes beyond neutral level") and Bank of Japan Governor Kazuo Ueda. “The U.S. data signals continued resilience in [interest rate](https://www.financedigest.com/uks-berkeley-forecasts-20-drop-in-house-sales-as-interest-rates-rises-weigh.html "UK’s Berkeley forecasts 20% drop in house sales as interest rates rises weigh") sensitive sectors, and the Fed is very clear that a period of sub-trend activity may be needed to bring inflation under control,” said analysts at ANZ. “So far, that doesn’t seem to be happening.” For the ECB, senior officials signalled the need for ongoing tightening unless core inflation slows materially and a [September rate hike](https://www.financedigest.com/norway-central-bank-raises-rate-to-4-0-eyes-september-hike.html "Norway central bank raises rate to 4.0%, eyes September hike") is looking increasingly on the cards. The rate risk kept [markets cautious and MSCI’s broadest index of Asia-Pacific shares](https://www.financedigest.com/world-shares-rally-as-china-offers-markets-a-hand.html "World shares rally as China offers markets a hand") outside Japan was off 0.2%. Chinese blue chips dipped 0.6% and the yuan eased anew after Beijing fixed the [currency lower](https://www.financedigest.com/evergrande-jitters-pull-risk-currencies-lower-dollar-gains-on-safety-bid.html "Evergrande jitters pull risk currencies lower, dollar gains on safety bid") than many had expected, sowing confusion about whether policy makers really wanted to slow its slide. Sentiment was not helped by a Wall Street Journal report that Washington was considering new restrictions on exports of [artificial intelligence](https://www.financedigest.com/types-of-artificial-intelligence.html "artificial intelligence") chips to China. The report knocked Nvidia 3% [lower after the bell and dragged](https://www.financedigest.com/miners-drag-london-stocks-lower-unite-group-slips.html "Miners drag London stocks lower; Unite Group slips") Nasdaq futures down 0.4%. Yet it seemed to be welcome news for Japan’s [tech companies](https://www.financedigest.com/apple-makes-history-as-first-3-trillion-company-amid-tech-stock-surge.html "Apple makes history as first trillion company amid tech stock surge"), which drove a 1.5% rally in the Nikkei. [Chip groups Tokyo](https://www.financedigest.com/analysis-as-japan-aligns-with-u-s-chip-curbs-on-china-some-in-tokyo-feel-uneasy.html "Analysis-As Japan aligns with U.S. chip curbs on China, some in Tokyo feel uneasy") Electron and Advantest led the gains. EUROSTOXX 50 futures added 0.3% and FTSE futures 0.2%. S&P 500 futures dipped 0.2%, though that followed [solid gains](https://www.financedigest.com/wall-street-gains-dollar-climbs-on-solid-data-debt-ceiling-progress.html "Wall Street gains, dollar climbs on solid data, debt ceiling progress") on Tuesday as U.S. data on housing, durable goods orders and [consumer sentiment](https://www.financedigest.com/unilever-downbeat-on-europe-china-consumer-sentiment.html "Unilever downbeat on Europe, China consumer sentiment") handily topped expectations. The data indicated a firmer pace of residential, inventory, and equipment investment in the [second quarter,”](https://www.financedigest.com/dollar-pares-gains-as-us-growth-contracts-for-second-quarter.html "Dollar pares gains as US growth contracts for second quarter") wrote analysts at Goldman Sachs. “We boosted our Q2 GDP tracking estimate by 0.4pp to +2.2%.” That resilience offset recent softness in manufacturing surveys and led the market to narrow the odds on a [July rate hike](https://www.financedigest.com/fed-officials-still-leaning-to-75-basis-point-rate-hike-in-july.html "Fed officials still leaning to 75-basis-point rate hike in July") from the Federal Reserve. Futures now imply around a 77% chance of a hike to 5.25-5.5%, and slightly more risk of a further move to 5.5-5.75%, which nudged short-term [Treasury yields](https://www.financedigest.com/world-equities-fall-u-s-treasury-yields-rise-after-hawkish-fed.html "World equities fall, U.S. Treasury yields rise after hawkish Fed") higher. ## EURO ON THE RISE [Bond yields](https://www.financedigest.com/german-bond-yield-curve-most-inverted-in-nearly-31-years.html "German bond yield curve most inverted in nearly 31 years") also moved sharply higher in Europe after a bevy of central bankers sounded hawkish on inflation and warned rates would likely have to stay higher for longer. Markets imply a 90% probability of an [ECB rate hike](https://www.financedigest.com/stocks-dip-euro-volatile-after-ecb-rate-hike.html "Stocks dip, euro volatile after ECB rate hike") to 3.75% in July and a peak around 4.0%. That underpinned the euro at $1.0950, while keeping it near a 15-year peak of 157.97 yen. The [dollar had hit](https://www.financedigest.com/euro-falls-on-gloomy-pmi-data-dollar-hits-2-month-high.html "Euro falls on gloomy PMI data, dollar hits 2-month high") a near eight-month top of 144.18 yen, before easing back to 143.96 as Japanese officials again protested against the yen’s weakness. [Japan’s top](https://www.financedigest.com/japans-top-lenders-in-fresh-drive-to-win-us-investment-banking-deals.html "Japan’s top lenders in fresh drive to win US investment banking deals") currency diplomat Masato Kanda on Wednesday warned against further falls in the yen, saying authorities would take an appropriate response if moves became excessive. Markets are wary in case Japan intervenes to buy the yen as it did last October, which knocked the dollar down from a top of 151.94 to as low as 144.50 in a matter of hours. Yet, a rally in the yen looks unlikely while the Bank of Japan maintains its super-easy [monetary policy](https://www.financedigest.com/uks-ftse-100-dips-on-scope-of-tighter-monetary-policy-informa-jumps.html "UK’s FTSE 100 dips on scope of tighter monetary policy; Informa jumps"). Following BOJ Governor Ueda’s consistently dovish message and weak Japanese [wage growth](https://www.financedigest.com/dollar-jumps-as-u-s-job-gains-wage-growth-beat-expectations.html "Dollar jumps as U.S. job gains, wage growth beat expectations"), market participants now lack the conviction the BOJ will soon tighten its monetary policy,” said Carol Kong, a currency strategist at CBA. So we now see a [higher risk Japanese authorities will step into the market](https://www.financedigest.com/short-bowel-syndrome-market-higher-growth-rate-forecast-2020-2030.html "Short Bowel Syndrome Market Higher Growth Rate & Forecast 2020 – 2030") to prop up the JPY. In commodities, gold steadied at $1,915 an ounce, after finding support at the recent three-month low of $1,909.99. \[GOL/\] [Oil prices](https://www.financedigest.com/oil-prices-wobble-on-worries-over-china-economy-us-rate-path.html "Oil prices wobble on worries over China economy, US rate path") edged up after data showed a larger-than-expected draw in U.S. crude and gasoline inventories, but remains uncomfortably [close to its lows for the year](https://www.financedigest.com/world-stocks-rally-nikkei-closes-at-33-year-peak.html "World stocks rally, Nikkei closes at 33-year peak") so far. \[O/R\] Brent firmed 33 cents to $72.59 a barrel, while U.S. crude rose 20 cents to $67.90. (Editing by Lincoln Feast and Kim Coghill) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---