Mumbai, 21 Jun (Commoditiescontrol): Asian shares are ending the week on a subdued note following a rally to 26-month highs earlier in the week, which prompted profit-taking. Meanwhile, the strength of the U.S. dollar, driven by rate cuts from European central banks, continues to pressure the yen towards the intervention zone.
Overnight, the Swiss National Bank cut rates for the second time, and the Bank of England signaled potential easing in August after holding rates steady. This caused the sterling, the Swiss franc, and the euro to fall, thereby lifting the dollar broadly.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6% on Friday, dragged down by a pull-back in technology shares, mirroring a mixed session on Wall Street overnight. The index is still set for a weekly gain of 1% after hitting its highest level since April 2022 on Wednesday, buoyed by a series of soft U.S. economic data that reinforced expectations of two rate cuts from the Federal Reserve later this year.
Japan's Nikkei rose 0.1%, while the yen eased another 0.1% to 159.01, its weakest level since late April when Japanese authorities intervened to halt the currency's rapid decline. Data released earlier showed Japan's demand-led inflation slowed in May, complicating the outlook for interest rate hikes.
Chinese stocks were mostly flat, with the Shanghai Composite index struggling to stay above the critical 3,000-point level. Hong Kong's Hang Seng index tumbled 0.9%.
In foreign exchange markets, the euro nursed losses at $1.0705 after falling 0.4% overnight due to accelerated European rate cuts, while sterling remained flat at $1.2658, its lowest in five months. The dollar also held its gains against the Swiss franc at 0.8916 francs, having jumped 0.8% overnight.
Conversely, a still hawkish rate outlook for Australia's central bank has propelled the local dollar to a 17-year high against the low-yielding yen, reaching 105.85 yen.
U.S. Treasuries are set to end the week on a weaker note. The two-year yields edged up 2 basis points (bps) on Friday to 4.745% and were up 6 bps for the week, while the 10-year yield rose 1 bps to 4.2672%, bringing the weekly increase to 5 bps.
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 remained flat at $2,358.83 per ounce.
(By Commoditiescontrol Bureau: 09820130172)
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