Markets

Retailers, technology lead early gains for U.S. stocks

Retailers, technology lead early gains for U.S. stocks

Some market players were recently buying dollar/yen put options to position for dollar weakness, and the market now appears "well covered" against downside risks in the USA currency, he said.

Wall Street stocks were also hurt as Walmart, the world's biggest brick-and-mortar retailer, reported a lower-than-expected profit, dragging down other retailers.

The lift in United States yields saw the U.S. dollar index, or DXY, lift to the highest level since February 14, extending its rally from the multi-year low of 88.253 struck last week to over 2%.

Although inflation continues to run below the Fed's 2 percent target despite unemployment at a 17-year low of 4.1 percent, he said, "A deviation from our target of a few tenths of 1 percentage point, especially one I expect to fade, does not cause me great concern".

Australian stocks were almost flat and South Korea's KOSPI gained 0.55 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.7 percent after slipping earlier in the session following the US market losses, which snapped a six-session winning streak.

European shares held steady, supported by softer domestic currencies.

Germany's DAX Index fell 0.1 percent.




Confidence in the dollar has also been shaken by mounting worries over the US budget deficit. While investors seem to have adjusted to 10-year rates at a four-year high for now, the deluge of supply could push yields higher, weakening the case for owning stocks at elevated valuations.

The Treasury's $258 billion of auctions slated for this week comes amid surging rates that gave impetus to one of the steepest equity selloffs in years two weeks ago.

His more dovish colleague, Philadelphia Federal Reserve Bank President Patrick Harker, said in a speech in St. Louis that he has penciled in just two interest-rate hikes for this year, though he signaled he is open to more if needed.

Oddly enough, the weakness of the greenback has come despite higher Treasury yields. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, increased by 5 basis points to 2.943%.

Some of the USA government's short-term borrowing costs rose to their highest level in more than nine years on Tuesday as it raised $179 billion in the Treasury securities market to fund spending and make debt payments.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was steady at 89.67, the highest since February 14. Hong Kong's Hang Seng lost 1.1 percent to 31,076.62 but the Shanghai Composite rose 1.6 percent to 3,250.64, fueled by pent-up demand from investors in mainland China, where markets reopened after a weeklong holiday.

The dollar's rebound also put most emerging market currencies under pressure. Hong Kong's Hang Seng rose 1.2 percent.


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