Stocks, dollar under pressure after soft US data

Reuters: Shares and the US dollar dipped on Monday while US bond yields slumped to five-month lows after soft US economic data hurt investor sentiment already frayed by worries over North Korea and coming French elections.

That dwarfed any relief for market players after the US Treasury department did not name China as a currency manipulator, avoiding an all-out confrontation on currencies between the world’s two largest economies.

S&P 500 mini futures declined 0.15% to 2,324, edging near a six-week low of 2,317.75 touched in late March following US President Donald Trump’s defeat on healthcare reform.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.1% in holiday-thinned trade, while Japan’s Nikkei fell as much as 0.6% to hit a five-month low before ending up 0.1%.

Most European share markets will be closed for Easter holidays.

A raft of Chinese economic data beat market expectations but did not produce notable market reactions as investors had been already optimistic following a recent string of positive China numbers.

China’s economy grew 6.9% in the first quarter from a year earlier, a tad above economists’ forecast of 6.8%.

However, mainland Chinese shares fell, with Shanghai Composite Index down 1.0% at 3,212, risking a close below its 60-day average at 3,216, seen as an important support by investors and weighed by warning from top securities regulator to combat market misbehavior.

US retail sales dropped more than expected in March while annual core inflation slowed to 2.0%, the smallest advance since November 2015, from 2.2% in February, data showed on Friday.

That helped to drive down the 10-year US Treasuries yield to 2.200%, its lowest level since mid-November from around 2.228% on Thursday before a market holiday on Friday.

The yield had risen above 2.6% in December and again in March, from around 1.85% before the US presidential election, on expectations of Trump’s stimulus.

But growing perception that Trump will struggle to push any tax cuts and fiscal spending programs through the Congress has prompted unwinding of the “Trump” trade.

Fed fund futures rose in price, now pricing less than a 50% chance of a rate hike in its 13-14 June meeting for the first time in about a month.

Trump’s administration declined to name any major trading partner as a currency manipulator in a highly anticipated report on Friday, backing away from a key Trump campaign promise to slap such a label on China.

The dollar slipped to as low as 108.13 yen, a five-month low and 0.4% below its late US levels.

The euro stood at $1.0622, little moved so far, and not far from a one-month low of $1.0570 touched last Monday, with focus on the French presidential election.