Berliner Boersenzeitung - Stocks bounce after Treasury-led sell-off

Worries about the US budget deficit have returned to the fore this week after Moody's removed its top-tier credit rating and the president pushed ahead with a budget that some suggest will expand the country's ballooning debt.

A tepid auction of 20-year Treasuries on Wednesday ramped up those concerns, dealing a blow to stocks that had just recovered from the April fireworks of Trump's tariff blitz.

Still, sentiment stabilised on Thursday, with yields pulling back after the Republican-led House narrowly passed Trump's "One Big, Beautiful Bill Act", which shrinks social safety net programmes to pay for a 10-year extension of his 2017 tax cuts.

The package, which now goes to the Senate, had faced scepticism from fiscal hawks who fear the country is headed for bankruptcy, with independent analysts warning it would increase the deficit by as much as $4 trillion over a decade.

But the White House insists it will spur growth of up to 5.2 percent, ensuring it adds nothing to the $36 trillion national debt -- growth projections that are well outside the mainstream consensus.

There is a feeling that "perhaps the fiscal worries have gone a bit too far", said Pepperstone's Chris Weston.

"Many have crunched the numbers on the tax bill and see the raft of measures to not be overly stimulatory and to therefore result in a major blowout of the deficit in 2026 and 2027 and is, in fact, quite neutral in its effect."

The drop in Treasury yields -- suggesting improving demand for US debt -- was helped by upbeat data on the jobs market, home sales and factory activity that observers said indicated the economy remained healthy.

A mixed day on Wall Street was followed by a slightly better performance in Asia.

Tokyo, Hong Kong, Sydney, Mumbai, Bangkok, Manila and Jakarta rose with London, Paris and Frankfurt.

But Shanghai, Singapore, Taipei and Wellington struggled.

There was a little cheer from comments by Federal Reserve Governor Christopher Waller, who said interest rates could be cut in the second half of the year if Trump's tariffs come back down to around 10 percent.

"If we can get the tariffs down closer to 10 percent and then that's all sealed, done and delivered somewhere by July, then we're in good shape for the second half of the year," he told Fox Business.

The dollar slipped against the yen as figures showed Japanese inflation rose more than expected owing to a surge in food prices, particularly a near doubling in the cost of rice.

The reading turns the focus on the Bank of Japan as it considers its next move on monetary policy after a recent spate of interest rate hikes and in light of Trump's tariffs.

Bitcoin pressed on with its latest rally, hitting a record of $111,980.33, on hopes for a cryptocurrency bill on the regulation of so-called stablecoins, digital coins with value tied to the dollar.

This has led to optimism for future regulatory clarity in the sector, including for bitcoin, which is not directly linked to the dollar.

- Key figures at around 0810 GMT -

Tokyo - Nikkei 225: UP 0.5 percent at 37,160.47 (close)

Hong Kong - Hang Seng Index: UP 0.2 percent at 23,601.26 (close)

Shanghai - Composite: DOWN 0.9 percent at 3,348.37 (close)

London - FTSE 100: UP 0.4 percent at 8,771.35

Dollar/yen: DOWN at 143.34 yen from 143.99 yen on Thursday

Euro/dollar: UP at $1.1335 from $1.1281

Pound/dollar: UP at $1.3474 from $1.3419

Euro/pound: UP at 84.11 pence from 84.07 pence

West Texas Intermediate: DOWN 1.0 percent at $60.62 per barrel

Brent North Sea Crude: DOWN 0.9 percent at $63.89 per barrel

New York - Dow: FLAT at 41,859.09 (close)

(G.Gruner--BBZ)