- Yen perks up, JGB yields soar after BOJ Governor Ueda comments
- US economic data releases to influence market sentiment
- Investors eye Fed Chair Powell's comments for US rate cut clues
SINGAPORE, Dec 1 (Reuters) - Stocks fell on Monday after a strong end to November as a bout of risk aversion gripped markets even as U.S. rate-cut optimism remained intact, while the beaten-down yen firmed and Japanese government bond yields surged to their highest since 2008.
The spotlight in the currency market has been on the Japanese yen , which strengthened to 155.55 per U.S. dollar as Bank of Japan Governor Kazuo Ueda provided the clearest signal yet that interest rate hike could be on the cards soon.
Ueda said in a speech to business leaders that the central bank would consider the "pros and cons" of raising rates at its next policy meeting in two weeks.
After a strong comeback for equities in November, when investors shrugged off worries of an AI bubble, traders were looking for catalysts to continue any upward momentum, with the focus this week on economic data.
U.S. stock futures slid, with S&P 500 futures down 0.7% and Nasdaq futures 0.8% lower. European futures were also 0.3% lower. Cryptocurrencies bitcoin and ether both slumped more than 5%, highlighting the cooling risk appetite.
Hong Kong's Hang Seng, though, rose 0.7% but mood was generally sober.
"There’s no single headline driving today’s risk-off tone," said Saxo's chief investment strategist Charu Chanana, who pointed to several pressure points, including rising JGB yields and sliding cryptocurrencies.
"At the same time, weak China PMIs have revived stimulus hopes, which is why Hong Kong stocks are bucking the regional decline."
UEDA SPURS YEN STRENGTH
Ueda's comments strengthened the yen, pushed the Nikkei down about 2% and Japanese government bond yields to 17-year highs.
The two-year JGB yield , the most sensitive to the BOJ's policy rate, rose 3 basis points to 1.02%, while the yield on 10-year JGBs rose 7 bps to 1.87%. Both yields hit their highest since June 2008.
The market has been focusing on the yen for the last few weeks, uncertain over the timing of the next interest rate hike and concerned about fiscal policies under Prime Minister Sanae Takaichi.
Traders have been wary of intervention to stem the yen's decline in the wake of several verbal warnings from Tokyo officials.
Fred Neumann, chief Asia economist at HSBC, said Ueda's comments suggest that the BOJ is increasingly concerned about the adverse effect of continued exchange rate depreciation on consumer spending.
"Even if the BOJ hikes in December, which appears more likely after Ueda’s remarks today, investors will take a close look at subsequent policy guidance. A hawkish hike in December would go a long way to helping anchor exchange rate and bond market expectations."
Investor focus this week will be on U.S. economic releases that cover manufacturing and services activity as well as consumer sentiment.Matt Simpson, senior market analyst at StoneX in Brisbane, said if the incoming data signalled a slowdown without tipping into recession then sentiment would probably remain upbeat while the U.S. dollar weakens as it typically does at this time of year.
The dollar index , which measures the U.S. currency against six other rivals, was at 99.414, little changed on the day. The index has dropped 8% this year with much of the losses coming in the first half of the year.
CONSUMER SPENDING IN FOCUS
Investors will watch out for comments from Federal Reserve Chair Jerome Powell later in the day as they look for clues on what the Fed will do when it meets next week.
Traders are pricing in an 87% chance of a cut after a slew of dovish comments from policymakers in the last few days.Attention will also be on holiday consumer spending as data from Black Friday and Cyber Monday retail sales events trickle in.U.S. shoppers spent a record $11.8 billion online on Black Friday, up 9.1% from 2024, according to Adobe Analytics, which tracks visits shoppers make to online retail websites.In commodities, oil prices rose after OPEC+ agreed to leave oil output levels unchanged for the first quarter of 2026 as the group slows its push to regain market share amid fears of a looming supply glut.Brent crude futures were 1% higher at $63.03 a barrel. U.S. West Texas Intermediate crude was at $59.16 a barrel, up 0.99%.
Reporting by Ankur Banerjee in Singapore; Editing by Muralikumar Anantharaman, Kate Mayberry and Lincoln Feast.
Source: Reuters