A roaring rally across Asia and a dollar that won’t quit are reshaping currencies, gold, and crude all at once.
Asian stocks closed out a blockbuster quarter on Tuesday, with Japan’s Nikkei on track for a record-breaking gain while the dollar pushed the yen to its weakest point in 40 years.
The Nikkei climbed 1.6% and is set to finish the quarter up more than 38%, a record. South Korea’s KOSPI jumped 3% and is sitting on a stunning 71% quarterly gain, more than doubling since January. Taiwan’s index is up over 46% for the quarter. Hong Kong’s Hang Seng was the outlier, down 7.5%. Brent crude sits at $72.49 a barrel, back to pre-war levels.
What Happened
The dollar index is up 1.3% this quarter as traders dramatically rethink the Fed’s next move, swinging from expecting cuts to pricing in hikes. That shift has hammered gold, now headed for its worst quarter in over ten years, and pushed the yen down to 162.41 per dollar. Japan’s finance minister said officials are ready to step in if needed.
Strangely, foreign investors have been selling into the rally, pulling $17.3 billion out of South Korean stocks this year even as prices soared, a sign of profit-taking rather than fresh conviction.
What to Watch
For traders, the next moves hinge on Thursday’s U.S. jobs report and a Wednesday speech from Fed Chair Kevin Warsh. Watch whether Tokyo follows through on intervention threats, and whether money keeps rotating out of chip-heavy markets into Europe and China.
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Source: Reuters
