Stocks make meandering start to quarter; yen hits near 1-year low
By Kevin Buckland
TOKYO, Oct 2 (Reuters) -Asia's stock markets made a tentative start to the fourth quarter in holiday-thinned trade on Monday, nudging sideways while the dollar held firm and a last-minute deal to avert a U.S. government shutdown lifted S&P 500 futures.
Markets in India, Hong Kong and China were closed for a holiday.
Japan's Nikkei .N225 jumped as much as 1.7%, before retreating to flat in the mid-afternoon. The yen fell to within a whisker of 150-per-dollar and its weakness is a boon for exporters' and the pricing of their foreign earnings in yen.
An eleventh-hour deal to avoid a U.S. government shutdown, struck over the weekend, also helped the mood and lifted U.S. stock futures ESc1 by 0.5% in Asia. The weekend's stopgap funding bill allowed the government to keep operating through Nov. 17, and means key data releases including Friday's monthly payrolls report can go ahead on time.
European futures STXEc1 rose 0.2%.
"The shutdown risks are only delayed, not eliminated," TD Securities strategists wrote in a client note.
"A sense of reduced uncertainty is likely to drive a small relief in markets," but "market volatility is likely to remain elevated as investors wait for the next catalyst, which is likely to be top-tier data."
Japanese stocks were also boosted by the Bank of Japan's quarterly Tankan survey, which showed an improvement in business sentiment. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was flat.
Bond and foreign exchange trade remain driven by an anticipation of U.S. interest rates staying high and selling in Japanese bonds on Monday drew a central bank response.
Benchmark 10-year Japanese government bond yields JP10YTN=JBTC rose by a basis point to their highest for a decade at 0.775%. The Bank of Japan said it would buy bonds with 5-10 years to maturity on Wednesday, with the size of purchases to be announced then. Futures 2JGBv1 bounced on the news.
In the Treasury market 10-year yields US10YT=RR rose 4 bps to 4.6124% and the two-year yield rose 3.7 bps to $5.0832%.
The dollar stood tall in currency markets, though was stopped short of last week's milestone highs save for against the yen JPY=EBS, where it hit its highest since last October at 149.74 yen.
"Relative U.S. growth resilience and (a) hawkish Fed are factors that continue to underpin support for the dollar, until U.S. data starts to show more material signs of softening," said OCBC currency strategist Christopher Wong.
Mixed China factory surveys and an expectation of no changes to rates settings at central bank meetings in the coming days kept pressure on the Australian and New Zealand dollars. AUD/
The Aussie AUD=D3 fell 0.5% to $0.6400 and the kiwi NZD=D3 slipped 0.2% to $0.5986. The euro EUR=EBS was a touch weaker at $1.0564.
Crude oil steadied after late-week falls
Brent December crude LCOc1 futures rose 16 cents, or 0.2%, to $92.36 a barrel. U.S. West Texas Intermediate crude CLc1 futures gained 20 cents, or 0.1%, to $90.99 a barrel.
World FX rates YTD http://tmsnrt.rs/2egbfVh
Global asset performance http://tmsnrt.rs/2yaDPgn
Asian stock markets https://tmsnrt.rs/2zpUAr4
Reporting by Kevin Buckland. Additional reporting by Tom Westbrook in Singapore; Editing by Edwina Gibbs & Simon Cameron-Moore
To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets For the state of play of Asian stock markets please click on: 0#.INDEXA
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.