Asian Currencies Hit Two-Decade Low, Stocks Mixed: Markets Wrap

A gauge of Asian currencies hit its lowest in almost two decades against the dollar and equities fluctuated, with gains from a buoyant chip sector offset by weakness in Japan. 

Benchmarks in Taiwan and South Korea advanced, helped by SK Hynix Inc. and other technology firms after Microsoft Corp.’s plan to spend $80 billion on data centers stoked interest. Hon Hai Precision Industry Co., the assembly partner to Nvidia Corp. and Apple Inc., rallied after the company also known as Foxconn reported better-than-expected revenue. 

Japan’s Topix dropped, with Nippon Steel Corp. declining after US President Joe Biden blocked the company’s planned $14.1 billion takeover of United States Steel Corp. US equity futures pointed to a weaker open on Wall Street later in the day. 

The up-and-down action in Asian stocks suggests investors are wary of piling on more risk due to looming US-China trade tensions. While monetary policy easing, Beijing’s stimulus measures, and AI-driven optimism may power gains, tariffs threaten to undermine momentum.

The yen led declines among Group-of-10 currencies against the greenback, while the Canadian dollar got a lift from a Globe and Mail report that Prime Minister Justin Trudeau is likely to announce his resignation as leader of the Liberal Party this week. The gains in the loonie may be short-lived given the “bearish macro backdrop” for the currency, according to RBC Capital Markets.

China maintained its support for the yuan with the daily reference rate after the currency slumped past a key level on Friday.

Goldman Sachs Group Inc. analysts including Andrew Tilton wrote in a note. “The key exception will remain Japan, where we expect reflation to be sustained this year and rate hikes to continue.” 

China’s services activity expanded at the fastest pace since May, a private survey showed on Monday, signaling improving domestic demand after Beijing’s stimulus blitz.  Elsewhere, Israel’s central bank will hand down an interest rate decision, while data for release includes German inflation and US factory orders.

In the US, Federal Reserve Governor Lisa Cook will speak at a conference on law and microeconomics at the University of Michigan. Her colleague Tom Barkin, the Richmond Fed President, suggested on Friday his preference was to keep rates restrictive for longer. 

The comments, and data showing the US economy remains strong, underscore the challenge investors face in deciphering the path ahead for US interest rates after Fed Chair Jerome Powell’s hawkish pivot in December.

Treasury yields rose for a second session, remaining near the highest levels since May.

Elsewhere, President Joe Biden is set to order a ban on new offshore oil and gas development across some 625 million acres of US coastal territory, ruling out the sale of drilling rights in Atlantic and Pacific waters as well as the eastern Gulf of Mexico.

WTI crude rose for a sixth day, its longest such streak since April, while gold also advanced.