EMERGING MARKETS-Asia FX tick up on US economy strength; stocks stumble on high yields


By Harshita Swaminathan

June 28 (Reuters)Many advanced Asian currencies on Tuesday, as recessionary fears were eased in part by positive economic data from the United States, but its effect on bond yields left equities pressured.

The Singapore dollar SGD=Thai baht THB=TH and South Korean won KRW=KFTC all saw modest gains of about 0.1% each.

Orders for capital goods in the US grew in May, hinting that business spending had remained resilient amid fears of a slowdown.

Additionally, contracts to buy previously owned homes in the US also recorded a surprise rise in May, data showed, after six months of declines, despite higher borrowing costs.

“Overall, markets are paying more attention to the resilience of US consumer demand and private investment that the Fed relies on to expedite rate hikes to neutral,” analysts at DBS said in a note.

Recent weaknesses in the mood for the dollar may also be an influence, said Bank of Singapore FX strategist Moh Siong Sim. The dollar index .DXY is on its third consecutive session of losses.

“The market was nervous at the earlier part of last week, but risk markets started to stabilize, and that I think led to a bit of a dollar pullback, and this is why you’re starting to see a bit of an Asian currency strength “, he said.

However, the positive US data prompted bond yields to inch higher, weighing equity markets on Wall Street and later in Asia. US/

Yields in Singapore also tracked higher, with the yield on the 10-year bond SG10YT=RR ticking up 2.9 basis points to 3.031%.

Stocks in Asia saw choppy trade but remained broadly lower, with Indonesian stocks .JKSE down 0.5% and Singaporean markets .STI down 0.3%.

Ratings agency S&P late on Monday revised its outlook for Malaysia to “stable” from “negative”, given its monetary policy flexibility and its record of supporting sustainable economic growth.

The ringgit MYR= rose 0.1%, while its bonds MY10YT=RR were unchanged, still yielding 4.241%.

The Philippine peso PHP=after snapping an eight-session losing streak on Monday to close the session 0.2% higher, was back to losses on Tuesday.

Indonesia’s rupiah IDR= declined 0.3%, to be one of the worst performers in the region.

“Divergence in Fed-(Bank Indonesia) policy stances, as well as a recent decline in (crude palm oil) prices weighing on trade balances, could be supportive of USDIDR near-term”, analysts at Maybank said.

Palm oil prices have been inching lower on expectations of higher production as well as recessionary fears. POI/

HIGHLIGHTS:

** Debt-laden property developer China Evergrande Group 3333.HK says it will vigorously oppose a winding-up lawsuit against it for defaulting on payment

** Sri Lanka halts fuel supply to non-essential services for two weeks amid severe shortage

Asia stock indexes and currencies at 0213 GMT

COUNTRY

FX RIC

FX DAILY %

FX YTD %

INDEX

STOCKS DAILY %

STOCKS YTD %

Japan

JPY=

+0.08

-14.96

.N225

0.25

-6.44

China

CNY=CFXS

-0.05

-5.11

.SSEC

-0.06

-7.22

India

INR=IN

-0.38

-5.47

.NSEI

-0.54

-9.26

Indonesia

IDR=

-0.27

-3.98

.JKSE

-0.55

6.02

Malaysia

MYR=

+0.13

-5.30

.KLSE

-0.21

-8.45

Philippines

PHP=

-0.02

-6.94

.psi

0.11

-12.31

S.Korea

KRW=KFTC

+0.06

-7.54

.KS11

0.39

-19.02

Singapore

SGD=

+0.02

-2.63

.STI

-0.28

0.16

Taiwan

TWD=TP

-0.15

-6.63

.TWII

-0.81

-15.35

Thailand

THB=TH

+0.03

-5.53

.SETI

0.43

-4.26

Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

Asian stock markets https://tmsnrt.rs/2zpUAr4

(Reporting by Harshita Swaminathan; Editing by Bradley Perrett)

((Harshita.Swaminathan@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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