Investing.com - Asian stock markets witnessed an uptick on Tuesday, while the dollar gained strength, keeping the yen near the critical 152-per-dollar mark that has sparked concerns about potential intervention. The shift in market dynamics was driven by fading anticipations of an immediate interest rate cut by the Federal Reserve.
Monday's data revealed a rebound in US manufacturing for the first time in 18 months during March, as production and new orders surged. This underscored the resilience of the economy and cast doubts over the timing of the Fed's rate cuts.
The positive manufacturing data led to an increase in US Treasury yields, with both two-year and 10-year yields reaching two-week highs, thereby bolstering the dollar.
The MSCI's broadest index of Asia-Pacific shares outside Japan rose by 0.65%, while Japan's Nikkei ascended beyond the 40,000 points mark, recording a 0.41% increase. The yen hovered at 151.715 per dollar, nearing the 34-year low of 151.975 it hit last week.
Japanese currency officials are closely monitoring the situation, given the robust US data complicates their efforts to bolster the yen. Speculations about currency market intervention have been rife since the yen slipped towards 152 to the dollar, last witnessed in 1990.
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Chinese stocks showed a mixed performance, with the blue-chip index remaining largely unchanged, while Hong Kong's Hang Seng Index climbed more than 2% as the market reopened after Monday's public holiday.
The S&P 500 began the second quarter on a subdued note, weighed down by concerns over the timing of interest rate cuts, following stronger-than-expected manufacturing data that drove Treasury yields higher.
The 10-year Treasury notes yield eased to 4.305% during Asian trading hours, after touching a two-week high of 4.337% in the previous session. The two-year US Treasury yield slipped to 4.693%, closely following the near two-week high of 4.726% marked on Monday.
The dollar broadly gained from the elevated yields, with the euro falling 0.11% to $1.0731 and sterling trading at $1.2541, down 0.07% for the day.
Market predictions for a Fed rate cut in June have dropped to 61% from 70% a week earlier. The markets are also pricing in 68 basis points of cuts for this year, lower than the 75 basis points projected last week.
In the commodities market, US crude rose 0.3% to $83.96 per barrel and Brent was at $87.72, up 0.34% on the day, buoyed by signs of improved demand and escalating Middle East tensions. Spot gold eased 0.1% to $2,248 per ounce, following an all-time high of $2,265.49 on Monday.