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Stocks Rally, Yen Drops as BOJ Eases Rate Worries: Markets Wrap

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(Bloomberg) — Stocks rose after the Bank of Japan moved to reassure markets following historic volatility sparked in part by an unexpected interest-rate hike last week.

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The Stoxx Europe 600 index rose 0.5%, with progress slowed by disappointing earnings reports from some of the region’s biggest companies. Futures for the S&P 500 and Nasdaq 100 rose about 0.6% after the benchmarks rose more than 1% on Tuesday amid a wave of dip buying. Japanese stocks led a broad rally in Asia.

Bank of Japan Deputy Governor Shinichi Uchida sent a strong, forgiving signal by pledging to refrain from raising interest rates when markets are unstable. The yen fell more than 2 percent against the dollar after his comments, the first public remarks by a BOJ board member since the bank hiked rates on July 31.

The rate hike sent Japanese stocks tumbling for three days, sent the yen soaring and the carry trade on currencies rapidly unraveling, sending riskier assets lower worldwide. Concerns about a slowing U.S. economy and sky-high valuations of technology stocks also helped fuel a dramatic selloff on Monday that wiped $6.5 trillion off equities over three weeks.

“The markets are starting to stabilize now,” Aisha Tariq, co-founder of Macrovisor, said on Bloomberg TV. “I don’t think we’re done yet. The macro data is weakening and we’re entering a more seasonal period. But we don’t think there will be a sustained decline.”

Treasury yields rose and the Bloomberg Dollar Index rose for a second day.

The Mexican peso, which has been a target of carry trades and which fell after the Bank of Japan raised interest rates, rose more than 1% against the dollar on Wednesday. The Australian and New Zealand dollars also rose.

Among individual stock moves in Europe, Novo Nordisk shares fell after the Danish drugmaker cut its profit outlook for the year as sales of its popular weight-loss drug Wegovy fell short of expectations in the quarter. Shares in Commerzbank AG, sportswear maker Puma AG and skincare maker Beiersdorf AG also fell after disappointing results.

Main events this week:

  • US Consumer Credit, Wednesday

  • Industrial production in Germany, Thursday

  • Initial Jobless Claims in the United States, Thursday

  • Federal Reserve Board Member Thomas Barkin speaks Thursday.

  • China CPI, Friday

Some key movements in the markets:

Stores

  • The Stoxx Europe 600 index was up 0.5% by 8:19 a.m. London time.

  • S&P 500 futures rose 0.5%.

  • Nasdaq 100 futures rose 0.6%.

  • Dow Jones Industrial Average futures rose 0.5%.

  • MSCI Asia Pacific Index rose 1.5%

  • The MSCI Emerging Markets Index rose 1.7%.

Currencies

  • The Bloomberg Dollar Index rose 0.1%.

  • The euro fell 0.1% to $1.0918.

  • The Japanese yen fell 1.5% to 146.57 yen per dollar.

  • The offshore yuan fell 0.4% to 7.1841 against the dollar.

  • The pound was little changed at $1.2698.

Cryptocurrencies

  • Bitcoin rose 0.2% to $56,688.88

  • Ether was little changed at $2,491.64.

Bonds

  • The yield on the 10-year US Treasury note rose two basis points to 3.91%.

  • The yield on the 10-year German bond rose by three basis points to 2.23%.

  • The yield on 10-year British bonds rose three basis points to 3.95%.

Goods

This story was produced with the help of Bloomberg Automation.

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