Japan’s Nikkei ends near 2-month low after Wall Street slides

TOKYO, May 12 (Reuters) – Japan’s Nikkei fell to its lowest in almost two months on Thursday as technology heavyweights tracked a sharp decline on Wall Street overnight.

The Nikkei share average .N225 fell 1.77% to 25,748.72, the lowest since March 15. The broader Topix .TOPX fell 1.19% to 1,829.18.

“It was hard to bet on Japanese stocks after the Nasdaq’s fall overnight,” said Shigetoshi Kamada, general manager at the research department at Tachibana Securities.

“As long as the Federal Reserve maintains its policy tightening, investors will remain cautious about investing in risk assets.”

U.S. stocks ended sharply lower overnight, with the Nasdaq dropping more than 3% and the Dow falling for a fifth straight day after inflation data did little to ease investor worries over the outlook for interest rates and the economy. .N

Technology investor SoftBank Group 9984.T tanked 8.03%, dragging the telecommunication sector .ICOMS.T 4.06% lower to make it the worst performing segment.

Telecom companies KDDI 9433.T and SoftBank Corp 9434.T fell 3.01% and 5.95% respectively.

Chip-related stocks Tokyo Electron 8035.T and Advantest 6857.T slid 1.6% and 3.63% respectively. Medical services platform M3 2413.T tumbled 10.29%.

Toyota Motor 7203.T, which warned of annual profit declines, ended 1.54% lower after trading in positive territory.

Peer Mitsubishi Motor 7211.T jumped 6.18% after forecasting a rise in profit. nXB0CZVRKR

Olympus 7733.T surged 11.24% as the endoscope maker forecast a jump in annual profit. nXB0JEM5CY

There were 88 advancers on the Nikkei index against 135 decliners.

The volume of shares traded on the Tokyo Stock Exchange’s main board was 1.52 billion, compared with the average of 1.22 billion in the past 30 days.

(Reporting by Junko Fujita; Editing by Uttaresh.V and Vinay Dwivedi)

((813-4563-2711, junko.fujita@thomsonreuters.com, Reuters Messaging:junko.fujita.reuters.com@reuters.net;))

Australia shares fall on gloomy U.S. inflation data; CBA rises on earnings beat

Updates to close

All major indexes on AXJO in red

CBA rises 0.6% after profit beat

NZ inflation expectations rise

By Upasana Singh

May 12 (Reuters) – Australian stocks ended lower on Thursday, hit by losses in technology stocks as higher-than-expected U.S. inflation data stoked worries of aggressive rate hikes, although the biggest domestic bank rose after third-quarter cash earnings beat.

The S&P/ASX 200 index .AXJO closed 1.8% lower at 6,941.00, with broad-based losses across all sub-indexes. The benchmark was up 0.2% on Wednesday.

“Market sentiment was battered by the latest U.S. inflation report for April,” said Kunal Sawhney, chief executive officer of Kalkine Group.

The U.S. consumer index price data showed that inflation has probably peaked in April, though it is likely to stay hot for a while and keep the Federal Reserve’s foot on the brakes to cool demand. nL2N2X315F

Domestic technology stocks .AXIJ tracked their U.S. counterparts lower, tumbling 8.7% in their biggest drop in more than two years and fifth consecutive session of losses. .N

Australia-listed shares of Block Inc SQ2.AX, WiseTech Global WTC.AX and Xero XRO.AX retreated between 6.9% and 17.6%.

Financials .AXFJ slipped 0.8% to hit a near 2-month low, falling for a sixth straight session.

Australia and New Zealand Banking ANZ.AX and Westpac Banking WBC.AX fell 1% and 1.9%, respectively, but Commonwealth Bank of Australia CBA.AX rose 0.6% after beating quarterly cash earnings estimate. nL3N2X33YY

The metals and mining index .AXMM slid 2%, with mining majors BHP Group BHP.AX, Rio Tinto RIO.AX and Fortescue Metals FMG.AX dropping between 1.6% and 2.8%.

Weak oil prices dragged energy stocks .AXEJ down 2.3%, with oil and gas explorers Woodside Petroleum WPL.AX and Santos STO.AX declining 3.1% and 2.1%, respectively. O/R

“Looking ahead, the Australian share market is expected to remain volatile amidst growing recession risks and commodity price fluctuations,” Sawhney said.

“To navigate the upcoming volatility, it seems imperative for investors to avoid panic selling and remain patient and judicious.”

New Zealand’s benchmark S&P/NZX 50 index .NZ50 fell 0.5% to 11,177.36, after data showed the country’s near-term inflation expectations rose in the second quarter. nS9N2V502F

(Reporting by Upasana Singh in Bengaluru; Editing by Rashmi Aich)

((Upasana.Singh@thomsonreuters.com))

For more information on DIARIES & DATA: U.S. earnings diary  RESF/US   Wall Street Week Ahead   .N/O Global Economy Week Ahead DATA/ ................................................................ For latest top breaking news across all markets          NEWS1

South Africa’s rand weaker amid dollar strength

JOHANNESBURG, May 12 (Reuters) – South Africa’s rand fell against the dollar in early trade on Thursday as the greenback remained generally strong and investors awaited local mining and manufacturing data.

At 0627 GMT, the rand ZAR=D3 traded at 16.1600 per dollar, 0.2% weaker than its previous close.

Traders said the currency was on the back foot due to the strength of the dollar, which held near a two-decade high on Thursday after U.S. inflation moderated by less than markets had expected, keeping the Federal Reserve on course to tighten monetary policy aggressively.nL3N2X40ID

South African-focused investors will look to March mining and manufacturing data for clues on the first-quarter performance of the economy, which has been facing a power crisis.

Government bonds also weakened, with the yield on the benchmark 2030 maturity ZAR2030= rising 5 basis points to 10.09%.

(Reporting by Olivia Kumwenda-Mtambo; Editing by Bradley Perrett)

((Olivia.Kumwenda@thomsonreuters.com; +27 10 346 1084;))

FOREX-Dollar at 2-decade high as CPI keeps aggressive U.S. rate hikes likely

By Kevin Buckland

TOKYO, May 12 (Reuters) – The dollar hit a two-decade high on Thursday after U.S. inflation moderated less than markets had expected, keeping the Federal Reserve on course to tighten policy aggressively.

The safe-haven greenback also got support amid a slide in global equities amid investor worries that central banks are behind the curve in trying to rein in consumer prices, with growth already facing risks from China’s prolonged COVID-19 lockdowns.

Riskier currencies like the Aussie and New Zealand dollars sank along with cryptocurrencies.

The dollar index =USD, which measures the buck against six major peers, added about 0.1% to 104.22, hitting its highest since December 2002.

The consumer price index climbed 8.3% on an annual basis in April, easing from 8.5% in March but outstripping the 8.1% estimate of economists. nL2N2X315F

The data suggested inflation may have peaked, but was unlikely to cool quickly and derail the Fed’s current monetary policy plans.

The market is fully priced for at least a half percentage point increase to the policy rate at each of the next two Fed decisions, on June 15 and July 27, according to the CME FedWatch Tool.

“The stronger-than-expected U.S. inflation print heightened concerns over the need for the Fed to accelerate its policy tightening path,” Rodrigo Catril, senior currency strategist at National Australia Bank, wrote in a client note.

The May CPI data comes five days before the June Fed meeting, and another “shocker” would make a 75 basis-point hike then a “strong possibility,” he said.

The euro EUR=EBS was about flat at $1.05095 after receiving a lift overnight as the European Central Bank overnight firmed up expectations that it will raise its policy interest rate in July for the first time in more than a decade.nL5N2X32V5

The single currency plumbed a more than five-year low of $1.04695 at the end of last month.

The yen JPY=EBS continued to garner support from an easing in long-term Treasury yields from a multi-year peak above 3.2% at the start of the week.

Japan’s currency added about 0.2% to 129.67 per dollar, pulling further away from the more than two-decade low of 131.35 reached Monday, as the 10-year Treasury yield US10YT=RR retreated to an almost two-week low of 2.862% in Tokyo trading on Thursday.

The British pound GBP=D3 languished as Brexit headlines returned, with the attorney-general for England and Wales advising the government that it would be within its legal rights to scrap large parts of the Northern Ireland protocol, according to the Times newspaper. nL2N2X336K

Sterling, which also tends to move with risk assets, dipped to $1.2211 on Thursday for the first time in almost two years.

The Aussie AUD=D3 slumped 0.76% to $0.6885 and earlier reached $0.68795 for the first time in almost two years. New Zealand’s kiwi NZD=D3 dropped 0.79% to $0.6240, also an almost two-year low.

Bitcoin BTC=BSTP slid about 8% to $26,645, but stayed above the previous day’s low of $27,757.77, a level not seen since the start of last year.

Smaller rival ether ETH=BTSP was last down almost 14% at 10-month trough of $1,785.

“Risk assets will surely not like (the U.S. CPI data) because it means that it remains far too premature to price out hikes in the fed funds curve,” TD Securities strategists wrote in a research note.

“This market is desperate to try to find the put in risk assets, but this time around, there will be no bailout because central banks are several months too late in tightening.”

World FX rateshttps://tmsnrt.rs/2RBWI5E

(Reporting by Kevin Buckland; Editing by Simon Cameron-Moore and Sam Holmes)

((Kevin.Buckland@thomsonreuters.com;))

Bitcoin falls to lowest in 16 months

HONG KONG, May 12 (Reuters) – Bitcoin fell to its lowest in 16 months on Thursday, leading a rush out of risk assets such as tech stocks, while the collapse of TerraUSD, a so-called stablecoin, underscored the strain on cryptocurrency markets.

The world’s largest cryptocurrency dropped as low as USD 26,970, to stand at its lowest since Dec. 28, 2020. In the last eight sessions, it has lost a third of its value, or USD 13,000.

Bitcoin surged in 2021 to reach its all-time high of USD 69,000 that November.

Traders say its recent decline mirrors tumbles in tech stocks, as the Nasdaq has lost 6.4% this week.

Another factor at play is the spectacular collapse of TerraUSD, once the world’s third largest stablecoin, which broke its dollar peg this week to fall as low as 30 U.S. cents, causing ructions in the crypto industry.

Market players are still weighing the fallout of its collapse to identify if any major companies or investors have been badly hurt, as a possible clue to wider contagion.

Ether, the world’s second largest cryptocurency, tumbled more than 10% on Thursday to stand as low as USD 1,833, its lowest since July 2021.

(Reporting by Alun John; Editing by Christopher Cushing and Clarence Fernandez)

JGB yields fall amid weak demand in domestic auction

TOKYO, May 12 (Reuters) – Japan’s government bond yields on Thursday tracked overnight fall in U.S. Treasury yields amid weak demand for a domestic 30-year bond auction.

The 20-year JGB yield JP20YTN=JBTC fell 0.5 basis point to 0.765%. The 30-year JGB yield JP30YTN=JBTC fell 0.5 basis point to 1.015%.

The 10-year JGB yield JP10YTN=JBTC was flat at 0.245%.

Investors found the Ministry of Finance’s auction for 30-year bonds weak, even as its bid-to-cover ratio of 3.08 was almost unchanged from 3.05 at the previous auction.

“The results were weak, as there was a clear gap between investors who made active and cautions bids,” said a market participant at a domestic brokerage.

U.S. Treasury yields fell overnight, after U.S. consumer price data showed the pace of inflation slowed in April, though not enough to ease concerns that the Federal Reserve’s agenda to cool rising prices may induce a recession. US/

The two-year JGBs were not traded and the yield JP2YTN=JBTC remained at -0.050%.

The five-year yield JP5YTN=JBTC fell 0.5 basis point to 0.010%.

The 40-year JGB yield JP40YTN=JBTC rose 0.5 basis point to 1.135%.

Benchmark 10-year JGB futures 2JGBv1 rose 0.12 point to 149.44, with a trading volume of 13,832 lots.

(Reporting by Tokyo markets team; editing by Uttaresh.V)

((813-4563-2711, junko.fujita@thomsonreuters.com, Reuters Messaging:junko.fujita.reuters.com@reuters.net;))

UPDATE 2-China to roll out new policies when needed to support economy – party official

Adds comment from stats bureau vice head

BEIJING, May 12 (Reuters) – China will not hesitate to introduce new policies to prop up growth, a senior Communist Party official said on Thursday, as the economy feels the pinch of protracted COVID-19 lockdowns.

China aims to implement existing policies in the first half of the year and is ready to take new steps when the need arises, Han Wenxiu, deputy head of the party’s office for financial and economic affairs, told a news conference in Beijing.

“We will waste no time in planning and rolling out incremental policies. There is sufficient room for fiscal, monetary policy and other policies, and we have various policy tools,” Han said.

“We will step up policy adjustments, we will take actions when necessary,” Han said without giving details.

China must control COVID in a “scientific, precise and effective” way, to create a vital pre-condition for normal economic operations, Han said.

The government has moved to cushion a deepening economic slowdown as authorities race to stop the spread of COVID cases with full or partial lockdowns in dozens of cities, including the commercial hub of Shanghai.

The COVID-19 resurgence is having a “huge impact” on China’s economy, but such impact will be short-lived, the official Xinhua news agency quoted Sheng Laiyun, deputy head of the National Bureau of statistics, as saying.

Some economists expect China’s year-on-year economic growth to slow sharply in the second quarter from 4.8% in the first quarter, or even shrink.

The government has been cutting taxes for businesses and channelling more funds into infrastructure projects, while the central bank has been pumping more cash into the economy and increasing support for some sectors.

Some government economists have been calling for additional policy stimulus, including expanding the annual budget deficit and issuing special treasury bonds.

The People’s Bank of China will step up financial support for the real economy, including lowering financing costs, deputy central bank governor Chen Yulu told the same news conference.

(Reporting by Kevin Yao and Ellen Zhang; Editing by Himani Sarkar, Robert Birsel and Andrew Heavens)

((Ellen.Zhang@thomsonreuters.com;))

Australia, NZ dlrs on the ropes again as China looms large

By Wayne Cole

SYDNEY, May 12 (Reuters) – The Australian and New Zealand dollars touched fresh two-year lows on Thursday as worries about China’s slowing economy weighed on Asian stocks, while a survey on New Zealand inflation expectations was more restrained than rate hawks had wagered on.

The Aussie was struggling at $0.6922 AU=D3, after some wild swings saw it reach as high as $0.7054 overnight only to lurch back to a low of $0.6906.

The kiwi sagged to a trough of $0.6265 NOD=D3, having also failed to sustain a bounce to $0.6379 overnight. The loss of chart support at $0.6268 opens the way to at least $0.6230.

It was not helped by a Reserve Bank of New Zealand (RBNZ) survey showing longer term inflation expectations had stabilised after four quarters of sharp increases. nS9N2V502F

The outlook for two years ahead steadied at 3.29% and the five-year outlook edged up only slightly to 2.42%, which the RBNZ said was close to or in line with its 1-3% target range.

Investors had been looking for much larger increases and quickly trimmed wagers on a half-point rate hike from the RBNZ at its May 25 policy meeting – though it is still seen as more likely than not.

That saw two-year swap rates NZDSM3NB2Y= drop a sharp 13 basis points to 3.630%, and away from a recent seven-year peak of 3.980%.

For the Aussie, the main drag remains coronavirus lockdowns in China and their impact on commodity demand.

While there has been speculation of further policy stimulus from Beijing, an easing of the strict zero-COVID rules will be needed to improve sentiment.

“We are confident that once lockdowns ease, China’s economy will snap back because of pent‑up demand and policy support,” said Carol Kong, a senior currency strategy at CBA. “As a result, we believe AUD can recover strongly before year end once there are signs the lockdowns will end.”

“But if we are wrong that lockdowns will end well before October, AUD could fall by another 5 U.S. cents in coming months.”

There were no major Australian data out on Thursday but Friday see an appearance by Reserve Bank of Australia (RBA) Deputy Governor Michele Bullock.

She is taking part in a panel discussion on financial regulation but the subject of interest rates is likely to come up given the bank’s recent hike.

(Editing by Kim Coghill)

((Wayne.Cole@thomsonreuters.com; 612 9171 7144; Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net))

UPDATE 2-Asian economic powers warn of risks from war, monetary policy normalisation

Risks to Asia recovery stem from normalisation, Ukraine crisis

East Asian nations pledged to commit to financial cooperation

No debate on rising dollar impact, Russia sanctions, BOJ easing

Adds Japan finance minister quote, details

By Tetsushi Kajimoto

TOKYO, May 12 (Reuters) – East Asian economic leaders warned on Thursday of risks to the region’s outlook and pledged to remain committed to market stability and sound fiscal policy.

Economic risks included unexpectedly early rises in interest rates “in some advanced nations”, runaway inflation and supply chain disruption on top of the war in Ukraine, finance ministers and central bank governors said in a joint statement.

The statement followed annual meetings, held online, of the officials from China, Japan, South Korea and the 10 members of the Association of South East Asian Nations (ASEAN).

The Japanese, Chinese and South Korean officials affirmed their commitment to supporting financial market stability and to long-term fiscal sustainability.

“We must remain on guard against heightening risks to which the regional economic recovery is being exposed … on top of the ongoing Russia-Ukraine conflict and earlier-than-expected monetary policy normalisation in some advanced nations,” it said.

“These factors could become downside risks to the regional economic outlook, causing volatility to financial markets and capital flows.”

The officials’ joint statement comes amid concerns that U.S interest rate rises and related reduction in central bank assets have driven up the dollar. This has raised the prospect of capital flight from some emerging markets and a rising burden of dollar-denominated debt in the developing world.

The officials steered clear of references to currency market moves, notably rises in the dollar and falls in the yen, or sanctions against Russia’s invasion of Ukraine, which Moscow calls a “special operation.”

Instead, they underscored progress in regional initiatives, including a mechanism aimed at helping countries in times of financial distress, the Chiang Mai Initiative Multilateralisation currency swaps deal.

A deep divide has emerged within the Group of 20 (G20) major economies, which includes Western nations that have accused Moscow of war crimes in Ukraine. Other members – China, Indonesia, India and South Africa – have not joined Western-led sanctions against Russia over the conflict.

ASEAN is chaired by Cambodia this year and includes Indonesia, which currently chairs the G20.

Japanese Finance Minister Shunichi Suzuki used harsher words than the joint statement in discussing the invasion of Ukraine.

“Russia’s unjustifiable invasion of Ukraine has shaken the foundation of international order and is a clear violation of international law,” Suzuki told reporters. “It is having a serious impact on the global economy with energy and food price rises, supply-chain disruptions, destabilisation of financial markets and increasing numbers of refugees.”

(Reporting by Tetsushi Kajimoto; Editing by Christopher Cushing and Bradley Perrett)

((tetsushi.kajimoto@thomsonreuters.com;))

CORRECTED-Bitcoin resumes tumble, drops around 2%

Corrects to remove incorrect milestone

HONG KONG, May 12 (Reuters) – Bitcoin BTC=BTSP resumed its slide on Thursday, continuing to fall alongside risk assets such as tech stocks, and also dragged down by the collapse of TerraUSD, the so-called stablecoin which lost its dollar peg this week. nL2N2X30RZ

The world’s largest cryptocurrency dropped around 2% to as low as $28,379.26.

(Reporting by Alun John; Editing by Christopher Cushing)

((alun.john@thomsonreuters.com;))

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