Aug 30 Japanese stocks ended marginally lower on Tuesday as the yen’s extensive retreat stalled and as investors awaited US job data later this week for more clues on a possible USA interest rate hike this year.
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Last week, U.S. Federal Reserve Chair Janet Yellen said in a speech at Jackson Hole, Wyoming, that she was optimistic about the U.S. economy and that the solid labor market performance and outlook for economic activity and inflation had strengthened the case in recent months for an interest rate hike.
As of Tuesday, markets were pricing in a 24 percent chance of a US rate hike next month, according to CME Group’s FedWatch tool, and a more than 50-50 chance of higher rates by the end of the year.
Craig Erlam, senior analyst at Oanda, said markets were focused on the US non-farm payrolls report for August, which is due on Friday. A raft of Japanese data, from unemployment to retail sales, mostly beat analysts’ forecasts but did nothing to change expectations the Bank of Japan would eventually have to ease further.
WALL STREET: The Dow Jones industrial average rose 107.59 points, or 0.6 percent, to 18,502.99.
Elsewhere, traders seemed less certain, with most world stock markets dipping as they tried to second-guess the Fed’s timing of its next rate rise. Sterling weakened 0.3 per cent to US$1.3067, and was 0.1 per cent weaker versus the euro.
The dollar rose marginally against major currencies in Asian trading on Tuesday as investors eyed Friday’s non-farm payrolls report. Banks have been hurt by historically low interest rates, which makes lending less profitable.
While a drop in the yen following stronger-than-expected USA consumer confidence data for August helped Japanese shares post strong gains, Australian shares led regional losses amid a sell-off in resource stocks.
MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS rose 0.5 percent, recouping around half of Monday’s loss. It was up 0.9% for the month.
Wall Street stocks were 0.7 percent higher at around 1545 GMT.
The focus on US rates put bonds under pressure, with German Bund yields pulled up by 10-year Treasury’s rise to 1.5850 percent. Sluggish domestic data that increased the prospect of further easing by the Bank of Japan (BoJ) also supported stocks.
Friday’s U.S.jobs report is expected to show employers added 180,000 jobs in August, according to the median estimate of 89 economists polled by Reuters.
Japan’s Nikkei .N225 dipped 0.1 percent as the yen turned around and starting nudging higher once more. Contracts on Hong Kong’s Hang Seng Index gained 0.3 per cent as futures on the Hang Seng China Enterprises Index rose 0.4 per cent. FTSE China A50 Index futures added 0.3 per cent.
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Mitsubishi UFJ Financial Group Inc., the country’s largest lender, climbed 1.4 percent, extending its gains this week to 10 percent. It is headed for a 2.7/oz decline in August. USA crude was down 0.2 per cent at US$46.24 after losing 1.3 per cent overnight. The euro rose to $1.1187 from $1.1183. Brent crude, used to price oil internationally, fell 1 cent to $49.44 a barrel.
