NEW YORK, Aug 4 (Reuters) - Wall Street stocks were poised for a relief rally Tuesday morning after the yen firmed against the dollar overnight.
Japan's beleaguered new government went on the offensive Tuesday to shore up the sagging yen, warning currency markets to beware of central bank intervention.
Finance Minister Kiichi Miyazawa said a weak yen was not in the best interests of either Japan or the world. He clarified remarks last week, saying, ''It was not my intention to say that interventions are unnecessary.''
Miyazawa spoke with U.S. Treasury Secretary Robert Rubin on the phone and agreed to meet soon.
The yen, which had slipped to around 146 to the dollar overnight, rebounded to 144.80 in early New York trading.
''The yen recovered against the dollar on comments the finance minister was misinterpreted (last week),'' said Peter Cardillo, director of research at Westfalia Investments. ''Also, there seems to be communication between Miyazawa and Rubin.
''The markets are reading between the lines and we are getting to levels where the yen might get out of hand and there might be some intervention.''
Cardillo expects the currency market to test the intervention will of the U.S. and Japanese governments over the next few days.
With Asian currencies firmly back in the stock market's focus, the renewed slide of the yen has reignited fears of a competitive currency devaluation by China.
A rise in stocks this morning may be short-lived because the market has suffered technical damage in the past two weeks, analysts said. Strong support was seen at 8,650 on the Dow. But a major negative event in Asia, such as a Chinese devaluation, could push blue chips toward 8,000, some market watchers say.
The Dow closed Monday down 96.55 points, or 1.09 percent, at 8,786.74.
At 0829 EDT/1229 GMT, September S&P futures were up 6.50 points on Globex and Dow Jones futures indicated the blue chips were set for a 50-point bounce at the open.
The long bond was down 8/32 to yield 5.68 percent, following the dollar lower.
Stocks react negatively to a rise in the dollar against the yen because a strong dollar cuts into profits of U.S. multinational companies, making it more difficult for them to compete overseas.
The Wall Street Journal's Heard on the Street column reports shareholder activists are taking advantage of low share prices to buy up big stakes in small stocks.
The New York Times' Market Place column reports financial analysts and accountants are stepping up pressure on Coca-Cola to consolidate its financial statements to include the bottling business. |
