Japan shares retreat after Yen surges as crude resumes losses

Bloomberg

Japan drove declines in Asian shares following Friday’s surge in the yen, while emerging-market currencies played catch-up as reduced bets on U.S. interest-rate increases weighed on the dollar. Oil swung to losses.
Exporters led the Topix index down for the second time in three days as the yen, while pulling back somewhat, remained beyond 103 per dollar following last session’s 3.1 percent surge. Stocks in Australia and South Korea advanced with U.S. index futures after Friday’s weaker-than-expected reading on American gross domestic product. Copper and aluminum fell ahead of a slew of global manufacturing data, while crude retreated toward $41 a barrel. The Korean won rose a fifth day as Malaysia’s ringgit rallied versus the dollar.
Traders have peeled back bets on a U.S. rate hike this year, even after San Francisco Fed chief John Williams and his counterpart in Dallas, Rob Kaplan, played down the GDP number, saying it didn’t exclude a move on borrowing costs in 2016. The data — which showed annualized GDP rose 1.2 percent last quarter, below the 2.5 percent growth projected by economists —came on the heels of the Bank of Japan’s decision to bolster purchases of exchange-traded funds, while keeping bond buying and rates unchanged. The focus now shifts to Tuesday, when Prime Minister Shinzo Abe may unveil details of his fiscal package.
“The very low amount of stimulus from the BOJ does leave the market clearly expecting significant move from Prime Minister Abe in his announcement,” Michael McCarthy, chief market strategist at CMC Markets Asia Pacific Pty in Sydney, said by phone. “Overall, we remain concerned about the impact of tighter U.S. policy, but that can easily be overwritten by a significant stimulus package from Japan.”
Manufacturing purchasing managers’ indexes are due for China to India and Japan Monday, while both Thailand and Indonesia will update on consumer prices.

STOCKS
The MSCI Asia Pacific Index lost 0.2 percent by 9:47 a.m. Tokyo time, as roughly double the number of rising stocks fell. The Topix slipped 1.2 percent, following a 6.2 percent advance in July.
In Australia, commodity stocks led the S&P/ASX 200 Index up 0.5 percent, while the Kospi index gained 0.7 percent in Seoul. New Zealand’s S&P/NZX 50 Index dropped less than 0.1 percent after closing at a record last session.
Futures on the S&P 500 Index climbed 0.2 percent to 2,172.25, after the underlying benchmark rose 0.2 percent on Friday in a second day of gains. In Hong Kong, contracts on the Hang Seng and Hang Seng China Enterprises indexes climbed at least 0.6 percent at the end of last week, as FTSE China A50 Index futures added 0.4 percent.

CURRENCIES
The yen retreated 0.4 percent to 102.46 per dollar after soaring the most since the U.K. voted to leave European Union on Friday. BOJ Governor Haruhiko Kuroda’s decision to aim low with his stimulus move raises stakes for Abe to deliver on a pledge for “bold” fiscal stimulus on Tuesday, when government is due to announce details of a more than 28 trillion yen spending package.
The won increased 0.7 percent, touching its strongest level in almost a month, while the ringgit gained 0.9 percent after weakening 1 percent
last month. The Bloomberg Dollar
Spot Index, which tracks the greenback against 10 major peers, added 0.1
percent after sliding 1.3 percent last session.
“Just at a time when evidence was building that the U.S. economy was in a position for the Fed to again contemplate rate hikes, some weak domestic data or a global event quite quickly scuttles those plans,” Philip Borkin, a senior economist in Auckland at ANZ Bank New Zealand Ltd., said in a note to clients.