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Asian stocks close week with muted performance, Yen under pressure

Published 21/06/2024, 12:54 pm
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Investing.com - Asian shares are wrapping up the week on a muted note, following a rally to 26-month highs earlier this week that triggered profit-taking. The US dollar's strength, in light of rate cuts by European central banks, continues to push the yen towards the intervention zone.

The Swiss National Bank cut rates for the second time, and the Bank of England hinted at a possible easing in August after keeping rates steady. This led to a drop in Sterling, the Swiss franc, and the euro, boosting the US dollar across the board.

The MSCI's broadest index of Asia-Pacific shares outside Japan fell by 0.6% on Friday, pulled down by a retreat in technology shares. The index is set to achieve a weekly gain of 1% after reaching its highest point since April 2022 on Wednesday, fueled by recent soft US data that bolstered expectations of two Federal Reserve rate cuts later this year.

Japan's Nikkei increased by 0.1%, while the yen softened by another 0.1%, trading at 159.01. This is the weakest it's been since late April when Japanese authorities intervened in the market to curb the currency's rapid declines.

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Chinese stocks remained mostly flat, with the Shanghai Composite index struggling to stay above a critical level of 3,000 points. Hong Kong's Hang Seng index fell by 0.9%.

In foreign exchange markets, the euro remained at a loss at $1.0705 due to the pace of European rate cuts, while sterling was flat at $1.2658, its lowest in five months. The dollar maintained its gains against the Swiss franc at 0.8916 francs.

On the other hand, a persistently hawkish rate outlook from Australia's central bank has pushed the local dollar to a 17-year high against the low-yielding yen at 105.85 yen.

Treasuries are set to conclude the week on a downtrend. Two-year yields rose 2 basis points (bps) on Friday to 4.745%, marking a 6 bps increase for the week, while the 10-year yield also rose 1 bps to 4.2672%, leading to a weekly increase of 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 US crude also fell 0.1% to $81.19 a barrel. Gold prices remained flat at $2,358.83 per ounce.

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