Mike Dolan previews U.S. and global markets. The soaring dollar was hammered by concerns about Japanese and Chinese moves to strengthen up the languishing yen and yuan in the holiday-shortened last week of the quarter.
As Easter approaches in most western countries, investors can look back at a strong first quarter that saw Wall St. equities reach new records and gains spread beyond megacap tech names to other industries and the world.
The equal-weighted S&P500 (.EWGSPC), which accounts for huge equities like the 'Magnificent Seven' megacap tech leaders, is up 6% this year, while the S&P 500 (.SPX) and Nasdaq (.IXIC) are both up more than 10%. Japan's Nikkei (.N225) is up 13%, while MSCI's all-country index (.MIWD00000PUS) is up almost 7%.
The spluttering of Big Tech leaders this year amid growing antitrust proceedings on both sides of the Atlantic only highlights broader index improvements. Last week's central bank meetings seem to have convinced everyone that interest rate cuts are coming by the end of the second quarter and that overseas policymakers will at least match the Federal Reserve.
This speculation lifted the dollar (.DXY) and across the board. The offshore yuan fell to a 2024 low on Friday, hurting China's renminbi. Even while the offshore unit is still about 0.5% weaker than Thursday's closing, suspected dollar selling by state-owned banks on Monday and robust central bank guidance appear to have stabilized the ship.
In Japan, where the Bank of Japan halted its negative interest rate policy last week, the sinking yen has found a base just under 152 per dollar as traders fear state intervention on additional steep falls. Japanese top currency ambassador Masato Kanda said Monday that the yen's fall was speculative and may lead to uncontrollable fluctuations. "I feel something strange about it," stated.
The Nikkei fell 1% and Chinese stocks fell on Monday as general market sentiment weakened. European stocks and Wall St futures stabilized. Rates and bonds were steady, with Treasury rates around Friday's closing. Despite continuing inflation and robust economic statistics, Atlanta Fed president Raphael Bostic released a hawkish statement late Friday, predicting only one quarter-point interest rate drop this year instead of two.
Former U.S. President Donald Trump must post a bail on Monday to satisfy a $454 million civil judgment against him in a New York state case after a judge ruled he inflated his assets. In geopolitics, President Joe Biden and Japanese Prime Minister Fumio Kishida will deepen military collaboration next month, including negotiations on Washington's largest East Asia command structure shift in decades.
follow for more updates