China shares jump, Japan tumbles with yen pinned near intervention zone

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TOKYO (Reuters) – Chinese shares led a rally around most of Asia on Monday amid a broadly optimistic global economic backdrop, but Japanese shares tumbled with the yen pinned near levels that have traders on guard for a currency intervention.

U.S. stock futures also pointed firmly higher following a market holiday on Friday, when the Federal Reserve released data showing their preferred inflation measure indicated price pressures are further easing, bolstering bets for a June interest rate cut.

Crude oil remained firm amid a tighter supply-demand picture, with China’s economy improving and expectations of OPEC+ output cuts. [O/R]

Mainland Chinese blue chips rallied 1.63% as of 0230 GMT, leading regional markets higher after a private survey showed the country’s manufacturing activity expanded at the fastest pace in 13 months in March, reinforcing official data on the weekend that showed the first expansion in six months in March.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.06%.

However, Japan’s Nikkei tumbled 1.5% as of the midday recess, weighed down by worries about yen-buying intervention that would hurt exporter profit outlooks and returns for foreign investors.

There was also selling on the first day of the nation’s new fiscal year, with the benchmark index still close to the record peak reached just over a week ago, analysts said. (T)

U.S. S&P 500 futures added 0.33% and tech-focused Nasdaq futures gained 0.54%.

Many markets are closed on Monday for Easter holidays, including Australia and Hong Kong in Asia, and the United Kingdom and Germany.

“Tamed” U.S. inflation “may offer some validation for the Fed to kickstart its rate-cutting process sooner rather than later,” said Yeap Jun Rong, a market analyst at IG.

“With Wall Street eyeing another run for a new record high, that may keep the broader risk-on sentiments going.”

Meanwhile, the positive China PMIs “may pave the way for bearish sentiments to unwind in the near term,” he added.

In currencies, the dollar eased 0.07% to 151.27 yen, but remained at the centre of its narrow trading range over the past week and a half.

Official warnings of intervention have stepped up since the yen weakened to a 34-year low of 151.975 per dollar last week, and Japanese Finance Minister Shunichi Suzuki repeated on Monday that he won’t rule out any options against excessive moves.

The dollar index, which measures the U.S. currency against six rivals including the yen, was steady at 104.50, hovering close to the six-week high of 104.73 it touched last week.

Leading cryptocurrency bitcoin rose 1.75% to $70,870.

In commodities, Brent crude rose 29 cents, or 0.3%, to $87.29 a barrel after rising 2.4% last week. U.S. West Texas Intermediate crude was at $83.48 a barrel, 31 cents, or 0.4%, following a 3.2% gain last week.