Hong Kong Shares Lead Asia Higher as Yen Weakens: Market Recap

The yen’s slide to its weakest level since 1990 has put traders on high alert for potential intervention, as Asian stocks surged following a strong rally in US equities. The Japanese currency dropped below 160 per dollar on Monday, sparking speculation about government intervention to stabilize its value.

Economists, including Duncan Wrigley from Pantheon Macroeconomics, believe that intervention to stabilize the yen through selling foreign reserves is becoming increasingly likely. This comes as Bank of Japan Governor Kazuo Ueda downplayed the impact of the weak yen on inflation.

Meanwhile, Hong Kong stocks led the regional rally, with the Hang Seng Index on track for a technical bull market. Chinese benchmarks also saw significant gains, signaling a revival in the market with increased foreign investment and improved earnings. Property shares surged after major developer CIFI Holdings Group Co. resolved liquidity issues with bondholders.

US equity futures also edged higher, building on Friday’s gains for the S&P 500 and Nasdaq 100. Australian and New Zealand bond yields fell, while the US dollar index remained steady.

Traders are now looking ahead to the Federal Reserve’s policy meeting on Wednesday, with a focus on any potential changes in the central bank’s tone regarding inflation and interest rates. Societe Generale economists anticipate a shift in the Fed’s stance due to accelerating consumer prices in recent months.

In corporate news, Tesla Inc. CEO Elon Musk made an unannounced trip to China, seeking approval for driver-assistance software. Additionally, L’Occitane International SA’s owner is reportedly considering taking the skincare company private.

Overall, market movements indicate a mix of optimism and caution as investors navigate shifting economic conditions and geopolitical developments.