By Kevin Buckland

TOKYO (Reuters) - Japan's Nikkei share average rallied to the highest level in 34 years on Thursday, as chip-related shares tracked overnight gains on Wall Street peers.

The benchmark stock index was also supported by a weak currency, which boosts the outlook for exporters, amid a continued outlook for dovish monetary policy as Japan unexpectedly slipped into a recession at the end of last year.

The Nikkei rose as high as 38,127.85 for the first time since January 1990 - when the so-called "bubble economy" was just starting to deflate - before entering the midday recess at 37,948.35, up 0.65% from the previous close.

The Nikkei marked a record high of 38,957.44 on Dec. 29, 1989, the final trading day of that year.

"I can't believe we'd come this far and not have a look at those all-time highs," said Tony Sycamore, a markets analyst at IG, flagging the potential for a test of the level by end-March.

"Into the Japanese financial year-end, the Nikkei generally does well," he said. "But if it misses out, then we'll have to look towards the middle of the year," with the Nikkei tending to retreat at the start of the new fiscal year in April, he added.

On Thursday, chip-related shares provided the Nikkei with an outsized lift, taking cues from a 2.2% jump in the Philadelphia SE Semiconductor Index overnight, outpacing rallies for the main three Wall Street benchmarks.

Chip-making equipment giant Tokyo Electron contributed the most: 133 index points with a nearly 4% jump. Artificial intelligence-focused startup investor SoftBank (TYO:9984) Group provided a 49-point boost with a 3% rise.

Corporate earnings produced some outsized winners and losers, with green energy company Ebara and e-commerce company Rakuten Group each surging nearly 16%. Toy company Bandai Namco tumbled more than 15%.

The yen's slide below 150 per dollar this week has been broadly supportive, as it boosts the value of overseas revenues and makes products more competitive.

The Japanese currency has been weighed down by comments from top Bank of Japan officials that even if negative short-term interest rate policy is removed in coming months, further rate hikes are likely to be slow.

The timing of any policy tightening was further complicated on Thursday by the release of data showing the economy slipping into a recession.

"If we get a 10 basis point rate hike in April, that's not going to change anything for the Nikkei," said IG's Sycamore.

"When you look at the bigger picture, it all looks good."

SEOUL (Reuters) - South Korea has prepared a financial support programme of 75.9 trillion won ($56.97 billion) for companies increasing investment in key sectors as well as small businesses struggling with the impact of high interest rates.

The programme includes 15 trillion won worth of cheap policy loans from a state-run bank for key industries, such as semiconductor and battery, while commercial banks will also provide 20 trillion won to support small and medium-sized businesses, the Financial Services Commission said in a statement on Thursday.

"Our banks need to start making efforts to expand support for companies, beyond consumer financing focused on mortgage loans," said Chairman Kim Joo-hyun.

Evolving trade relations with China, technological advancement in major industries and fragmentation of global supply chains pose new challenges to companies, raising the need for regulatory reform and financial support, Kim said.

For companies facing liquidity trouble this year due to high interest rates, banks will offer a temporary cut in interest rates, the commission said.

($1 = 1,332.3700 won)

SEATTLE - The typical U.S. homeowner now remains in their residence for 11.9 years, a figure that has dropped from the peak of 13.4 years in 2020, which coincided with the onset of the pandemic, according to a report from Redfin (NASDAQ: NASDAQ:RDFN), a technology-powered real estate brokerage. This trend marks a significant change from two decades ago when the average tenure was 6.5 years.

The report indicates that the aging baby boomer population is a key factor in the extended homeowner tenure, with nearly 40% having lived in their current homes for over 20 years, and another 16% for 10-19 years. In contrast, less than 7% of millennials have stayed in their homes for more than a decade, reflecting their younger age and greater job mobility.

Gen Xers also show a propensity for longer stays in their homes, with 35% surpassing the 10-year mark. The data further reveals that the oldest members of Gen Z, who were 26 in 2023, typically have owned their homes for less than five years.

Financial incentives are a significant reason for older Americans to remain in their homes. More than half of the baby boomers who are homeowners have no outstanding mortgage, leading to a median monthly cost of ownership that is just over $600. Additionally, tax policies in some states, such as property tax deferrals for seniors in Texas and California's Proposition 13, which limits property tax increases, encourage longer homeowner tenure.

Another contributing factor to the increase in tenure since the early 2000s is the preference of many older Americans to age in place, supported by advancements in medical and home technology, as well as the financial benefits of staying put given the current higher mortgage rates.

The report also notes that the current lack of housing inventory and high costs are both a result of and a contributor to longer homeowner tenure. This dynamic poses challenges for young, first-time buyers, particularly as baby boomers own a disproportionate number of larger homes suitable for families.

Following the pandemic-induced moving frenzy, which saw a spike in home sales due to remote work and low mortgage rates, homeowner tenure has seen a modest decline. Redfin anticipates that tenure rates will either remain steady or increase slightly as homeowners are locked into low mortgage rates, and while home sales may rise this year, a significant surge is not expected.

This analysis is based on a press release statement from Redfin.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Rae Wee

SINGAPORE (Reuters) - Asian shares extended a global sell-off on Wednesday, while the dollar and Treasury yields jumped as traders pared back expectations for the pace and scale of rate cuts by the Federal Reserve this year.

The latest shift in rate expectations came after an upside surprise in U.S. inflation on Tuesday which showed the consumer price index (CPI) rising 3.1% on an annual basis, above forecasts for a 2.9% increase.

Futures now point to about 90 basis points of easing priced in for the Fed this year, compared to 110 bps prior to the data release and 160 bps at the end of last year.

That kept pressure on global stocks, which had rallied strongly towards the end of last year on aggressive bets for rate cuts by major central banks globally in 2024.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3% and was headed for a fifth straight day of losses.

S&P 500 futures edged 0.06% higher, while Nasdaq futures gained 0.11%. EUROSTOXX 50 futures lost 0.23%.

"The stronger data pushes back on the hope of a rate cut from the Federal Reserve any time soon," said Daniela Hathorn, senior market analyst at Capital.com.

"We'll likely have to wait for the second half of the year for the Fed to start cutting, but the issue isn't so much whether the bank will cut rates this year, as that is an almost certainty at this point, but how many rate cuts there will be."

Even Japan's standout Nikkei was not spared from the beating and fell 0.7%, after gaining 2.9% in the previous session and topping the 38,000 level.

The recent move higher in the Nikkei was helped in part by a sliding yen, which had weakened past the key 150 per dollar level for the first time this year on Tuesday.

The yen last stood at 150.53 per dollar.

"If they do try intervention, I think it'll be near... the (dollar/yen) high from October 2022 and the high we saw in mid-November," said Tony Sycamore, a market analyst at IG, referring to intervention efforts from Japanese authorities to shore up the currency.

Japan's top currency officials warned on Wednesday against what they described as rapid and speculative yen moves overnight.

Elsewhere, stocks in Hong Kong reversed early losses to trade higher after returning from the Lunar New Year holidays. The Hang Seng Index rose 0.9%.

Mainland China's financial markets remain closed for the week. [.SS]

HIGHER FOR LONGER

The prospect that U.S. rates are likely to stay elevated for longer than initially expected pushed the benchmark 10-year Treasury yield to an over two-month high of 4.3320% on Wednesday. [US/]

The two-year Treasury yield, which typically reflects near-term interest rate expectations, last stood at 4.6286%, having similarly scaled a two-month top of 4.6730% in the previous session.

That's helped the greenback firm near a three-month peak against a basket of currencies at 104.76. The dollar index hit its strongest level since November on Tuesday.

"The attendant, broad-based U.S. dollar surge admittedly reflects (the) corresponding surge in U.S. Treasury yields," said Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank.

Sterling steadied at $1.26085, ahead of UK inflation data due later on Wednesday.

The pound spiked briefly in the previous session on data showing British pay grew at the weakest pace in more than a year at the end of 2023, but the slowdown was probably not significant enough to spur the Bank of England into quicker action towards cutting interest rates.

In cryptocurrencies, bitcoin retreated from the $50,000 level and last bought $49,600. [FTX/]

Oil prices meanwhile edged lower, reversing some of Tuesday's gains as geopolitical tensions lingered in the Middle East and eastern Europe. [O/R]

U.S. crude edged marginally lower to $77.86 a barrel. Brent futures eased eight cents to $82.69.

Gold was little changed at $1,991.89 an ounce. [GOL/]

By Sameer Manekar and Praveen Menon

SYDNEY (Reuters) -Commonwealth Bank of Australia on Wednesday warned of downside economic risks building in Australia from continued high interest rates and persistent inflation, as the country's largest lender posed a drop in its first-half profit.

The bank's profit, which still beat expectations, came a day after mortgage lending challenger Macquarie Group (OTC:MQBKY) said it was gaining market share and signals a tough year for Australia's "Big Four" banks as they enter an environment of lower margins and fees.

"As cash rate increases have a lagged impact on households and business customers, we expect financial strain to continue in 2024, with an uptick in our arrears and impairments," CBA CEO Matt Comyn said in a statement.

Shares of CBA fell 2.4%, with the broader Australian index down about 1% as of 0255 GMT.

Comyn said in a briefing after the results that the rising cost of living was being felt an increasing number of households and businesses, and as a consequence customers had reduced their spending.

"Inflation is falling but still remains too high," Comyn told analysts and investors on the call.

"And we expect economic growth to fall below 1.5% this year. Our base case remains a soft landing, and we're expecting these pressures to ease as inflation and interest rates start coming down later this year," he said.

CBA's profit reflects the earnings challenges Australian banks are facing from higher costs and a contraction in net interest margins (NIM), Daniel Yu, Vice President for Moody’s Investors Service said in a note.

"We expect these headwinds to persist in 2024 as tight competition for both lending and, deposits weigh on banks’ NIMs and operating costs increase further as the effects of elevated inflation linger," he said.

CBA's primary competitors are Westpac, National Australia Bank (OTC:NABZY) and ANZ Group.

SHARES RALLY

For the six months ending Dec. 31, CBA's cash profit fell 3.1% to A$5.02 billion ($3.24 billion) from A$5.18 billion a year earlier as intense mortgage competition and higher expenses due to inflation squeezed margins.

Despite that, the cash profit came in above a Visible Alpha consensus of A$4.95 billion.

Before the result, CBA's shares had jumped more than 20% since November, outshining a 12% rise in the wider market on the back of some investors fleeing China's battered markets and others switching to equities on expectations of interest rate cuts.

Comyn, however, said the bank's valuation was driven by consistent profitability and by the fact that it was very large and had by far the strongest deposit base in Australia.

UBS analyst John Storey said in a note that CBA had needed to deliver a strong set of results given the recent share price rally.

"Despite not living up to expectations, CBA  delivered $5B in cash NPAT, at a point in time when the bank has endured extreme levels of pricing pressure in mortgages &  deposits. If the mortgage market rationalizes, CBA is well placed," Storey added.

CBA's home loan portfolio shrank to A$582 billion at December-end from A$584 billion at the end of June, while Macquarie's grew to A$117.9 billion at end-December from A$114.2 billion at the end of June.

CBA's net interest income from continuing operations on a cash basis slipped 2% to A$11.4 billion as its net interest margin declined 11 basis points to 1.99% versus the prior year period.

The bank's common equity tier 1 capital ratio stood at 12.3% as at December-end, slightly above 12.2% as at June-end. It declared an interim dividend of A$2.15 per share, up from A$2.10 last year.

($1 = 1.5504 Australian dollars)

By David Lawder

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen said on Tuesday that consumer price index data for January showed progress in the fight against inflation despite a surge in the cost of shelter that pushed up the index more than was forecast by economists.

Yellen, speaking during an event at a Pittsburgh hospital, focused on the year-on-year CPI inflation figure of 3.1%, not the surprise 0.3% month-on-month surge in January.

"This morning's CPI report showed that, in January, the headline consumer price index fell to 3.1 percent. That's six percentage points below its peak in June of 2022," she said. "At the same time, the recession that many forecasters predicted we would need, to see inflation come down, hasn't materialized."

The hotter-than-expected consumer inflation reading helped drive down stocks on Wall Street, pushing back market expectations for Federal Reserve interest rate cuts. The data was somewhat at odds with Yellen's recent narrative that a "soft landing" for the U.S. economy was under way, with inflation tamed and wage growth outpacing prices pushed up by high post-pandemic inflation.

LOWERING HEALTH COSTS

Yellen stuck to that line in her remarks at the West Penn Hospital in Pittsburgh, where she discussed efforts taken by President Joe Biden's administration to cut healthcare costs.

"We have made significant progress in our fight to bring down inflation," with the prices of key household expenditures like gasoline, eggs and airline fares coming in lower," Yellen said, adding that the U.S. economy continues to grow with a historically strong labor market.

Yellen has traveled across the U.S. this year to promote Biden's economic policies, from tax credits for household clean energy upgrades in Boston that were funded by the 2022 Inflation Reduction Act (IRA) to job training programs funded by the 2021 American Rescue Plan Act.

In Pittsburgh, Yellen highlighted IRA provisions to allow Medicare, the healthcare program for seniors and the disabled, to negotiate prices for key prescription drugs, which is expected to reduce the deficit by more than $95 billion over a decade.

Tax credits extended by the IRA have lowered health insurance premiums, saving an average of $800 a year for 15 million Americans, Yellen said. The IRA also caps Medicare beneficiaries' insulin costs at $35 a month and an out-of-pocket cap on Medicare prescription drug costs is projected to lead to annual savings of $400 per person, she added.

"Having affordable health care leads to stronger financial security for middle-class families. It saves Americans and our country money," Yellen said.

By Tetsushi Kajimoto

TOKYO (Reuters) -Japan's top currency officials warned on Wednesday against what they described as rapid and speculative yen moves overnight when the Japanese currency broke past 150 yen, undermining the trade-reliant economy.

The dollar rose to three-month peaks on late Tuesday after data showed U.S. inflation rose more than expected in January, reinforcing expectations the Federal Reserve will hold interest rates steady in March.

"We are watching the market even more closely," Finance Minister Shunichi Suzuki told reporters. "Rapid moves are undesirable for the economy."

Asked whether authorities could intervene in the currency market, Suzuki left his office at the Ministry Finance without a word.

Earlier, Japan's top currency diplomat Masato Kanda said the nation would take appropriate actions on forex if needed.

"Recent currency moves are rapid. The yen has weakened by nearly 10 yen over the period of one month or so, such a rapid move is not good for the economy," Kanda, the vice finance minister for international affairs, told reporters at his office.

When asked whether the appropriate steps could include intervening in the market to stem the yen weakness, Kanda said authorities would take the most appropriate action.

"We are always watching the market 24 hours a day, 365 days a year to prepare for anything that may happen, just like natural disasters."

Market players have been pondering the future pace of the Fed rate cuts while speculating about the timing about the Bank of Japan's exit from negative interest rates policy.

Japan intervened in the currency market three times in 2022 when the yen plunged to 32-year lows near 152 yen to the dollar, conducting rare dollar-selling, yen-buying intervention.

Authorities have not intervened in the market since then. Kanda shrugged off speculation that Japan has put a line in the sand around 150 yen.

"We are not targeting specific currency levels, but we are comprehensively taking various factors into account, such as that how rapid the moves are and how far away they deviate from fundamentals."

By Christian Kraemer

BERLIN (Reuters) - Germany's federal government will significantly reduce its forecast for growth in the German economy to just 0.2% in a report due to be released next week, according to a source with knowledge of the matter.

Factors contributing toward the depressed figure — down from October's forecast of 1.3% — included low growth in the global economy and a German constitutional court ruling that blew a hole in the country's budget, according to the source.

The gloomy prospects for Germany's economy in 2024 come after the country's GDP shrank by 0.3% in 2023 under the pressure of high inflation, rising interest rates and a weak global economy.

German business association BDI issued a similarly low forecast in mid-January for growth of 0.3%, warning that the economy was at a "standstill".

An economy ministry spokesperson said they could not comment on the numbers, adding the government would provide comment when the official report was published.

Germany's finance minister Christian Lindner said on Sunday that the coalition government planned to present a concept to strengthen Germany's position as an industrial location this spring, after multiple warnings from both him and Economy Minister Robert Habeck that the country was losing its competitiveness on a global scale.

By Ankur Banerjee

SINGAPORE (Reuters) - Asian stocks inched higher and the dollar held steady on Tuesday ahead of a key U.S. inflation report that could help shape the Federal Reserve's rates outlook and determine the timing of interest rate cuts.

Bitcoin remained strong after crossing $50,000 for the first time in over two years, thanks to inflows into exchange traded funds backed by the digital asset. It was last at $50,0097 in Asian hours.

MSCI's broadest index of Asia-Pacific shares outside Japan was 0.15% higher in early trading. The index is down 3% so far in the year.

Japan's Nikkei on the other hand has carried on from last year and is up 12% for the year. On Tuesday, the index rose 1.7% to hit a fresh 34-year high on the back of a weak yen which is nearing the closely-watched 150 per dollar level.

China's financial markets are closed for the Lunar New Year holiday and will resume trade on Monday, Feb. 19, with Hong Kong markets due to resume on Feb. 14, leaving trading in Asia subdued and taking cues from the Wall Street.

On Monday, the Nasdaq slipped in the afternoon session after briefly surpassing its record closing high from November 2021. The benchmark S&P 500 closed lower but remained just above the 5,000-point level it crossed on Friday. E-mini futures for the S&P 500 fell 0.16%. [.N]

Investor attention this week will be on crucial reports on January's U.S. Consumer Price Index (CPI), due later in the day, and Producer Price Index, scheduled to be released on Friday.

A slew of recent data, led by strength in the labour market, has underlined the resilience of the U.S. economy and pushed traders to scale back expectations of early and deep interest rate cuts from the Fed.

Markets have all but chalked off chances of a rate cut in March, with traders pricing in a 13% chance of an easing compared with 77% a month earlier, the CME FedWatch tool showed.

Economists polled by Reuters expect CPI to rise 2.9% on a year-on-year basis, down from 3.4% in the previous month, with annual core CPI inflation also expected to slow to 3.7% in January from 3.9% a month earlier.

However, there is risk of an upside surprise, which could nudge yields higher and further strengthen the dollar, according to Charu Chanana, head of currency strategy at Saxo.

"May rate cut probability is around 70%, and there appears room to push that further to June with markets remaining sensitive to hawkish surprises for now."

Traders are still pricing in 111 basis points of cuts this year versus 75 bps of easing projected by the Fed.

The yield on 10-year Treasury notes was at 4.172%. The dollar index, which measures the U.S. currency against six rivals, was little changed at 104.16.

The Japanese yen, which is sensitive to U.S. rates, was last at 149.38 per dollar, not far from the closely-watched 150 level that analysts said would likely trigger further jawboning from Japanese officials in an attempt to support the currency. [FRX/]

In commodities, U.S. crude rose 0.03% to $76.94 per barrel and Brent was at $81.99, down 0.01% on the day. [O/R]

By Marc Jones

LONDON (Reuters) - Rating agency Fitch fired a warning shot across Britain's bows on Monday, urging the country's government to keep a tight rein on spending at its upcoming budget or risk another downgrade.

Fitch has an AA- grade and a negative outlook - effectively a downgrade warning - on its UK rating and is awaiting the budget next month where the struggling Conservative government is flagging possible tax cuts ahead of an approaching election.

"We estimate that the UK general government deficit rose to 6% of GDP in 2023 from 4.7% of GDP in 2022 and above the 2.7% ‘AA’ category median," Fitch said, adding that government debt of just over 100% of GDP now was "almost double" the median.

Focus for the budget will be on whether the government's new policy measures - which will come against a backdrop of easing of inflation, financing costs and potentially net borrowing - help reduce Britain's debt level.

"Policy choices are key to reducing UK fiscal uncertainty," Fitch said, highlighting that its next planned review of its UK rating was a couple of weeks after the March 6 budget on March 22.

"Implementing the fiscal consolidation projected after the election would entail real cuts in unprotected spending that could be politically challenging," Fitch said.