Stocks Extend Rally, Yen Gains as BOJ Holds Course: Markets End

(Bloomberg) — Asian shares extended a rally in global shares as jobs data supported the view that the U.S. economy is heading for a soft landing. The yen gained as the Bank of Japan left interest rates unchanged.

Bloomberg’s most read

The MSCI Asia Pacific index rose as shares in Japan, South Korea and Australia advanced, while shares in mainland China fell. A gauge of global shares set a new high alongside US stocks on Thursday.

The BOJ kept its monetary policy settings steady on Friday, signaling it saw no need to rush into interest rate hikes as it monitors financial markets after its July hike and dovish views spooked investors. Previously released data showed that the key inflation gauge rose in August for the fourth month in a row.

“The focus now shifts to Governor Ueda’s press conference,” said Shoki Omori, chief desk strategist at Mizuho in Tokyo. “Depending on the degree of this tone, if the bullish attitude is clearly conveyed to the market, the USD/JPY exchange rate is expected to trend down.”

Treasury yields were little changed on Friday, while an index of dollar strength was stuck in a narrow range.

A drop in U.S. jobless claims to the lowest level since May signaled that the labor market remains healthy despite a slowdown in hiring. That added a boost to risk appetite and eased concerns that the Fed may have been too slow to cut borrowing costs when it cut rates by half a percentage point on Wednesday.

Stocks’ gains on Thursday and Friday mark a “delayed euphoric reaction” to the Fed, but one that may be winding down, according to Nick Ferres, chief investment officer at Singapore-based Vantage Point Asset Management. “The valuation is already heroic and the risk compensation is poor, especially if the earnings cycle disappoints.”

In China, the country is considering lifting some of the biggest remaining restrictions on home purchases after previous measures failed to revive a moribund housing market, according to people familiar with the matter. This pushed the BI China Real Estate Owners and Developers Valuation Peer Group Index higher.

Meanwhile, national banks kept their benchmark lending rates on hold for September as policymakers held back on further monetary stimulus as financial institutions grapple with record low profit margins. The Securities Times reported on Friday that the Fed’s interest rate cut this week gave China room to boost monetary and fiscal stimulus to support the economy.

The story continues

The European Union and China have agreed to step up talks to avoid looming tariffs on electric cars ahead of a deadline that is just days away.

Elsewhere, Wall Street banks are divided on the pace and extent of future Federal Reserve interest rate cuts. JPMorgan Chase & Co. expects another 50 basis point cut in November, while Goldman Sachs Group Inc. anticipate cuts of 25 basis points at each meeting from November to June next year.

In Asia, Taiwan’s property and construction stocks fell on Friday after the central bank’s decision to increase the amount of funds banks must hold in reserve to cool the housing market.

The dataset for publication includes inflation for Hong Kong and foreign exchange reserves for India.

In commodities, gold settled near a record high, while oil was on track for its biggest weekly advance since April after the US interest rate cut.

Key events this week:

• The decision on the rate of Japan, Friday

• Eurozone consumer confidence, Friday

• Canadian retail sales on Friday

Some of the main movements in the markets:

Stocks

• S&P 500 futures were down 0.1% as of 12:52 p.m. Tokyo time

• Nikkei 225 futures (OSE) rose 2%

• Japan’s Topix rose 1.4%

• Australia’s S&P/ASX 200 rose 0.4%

• Hong Kong’s Hang Seng rose 1.3%

• Shanghai Composite fell 0.2%

• Euro Stoxx 50 futures fell 0.2%

• Nasdaq 100 futures fell 0.2%

Coins

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.1165

• The Japanese yen rose 0.3 percent to 142.16 per dollar

• The offshore yuan rose 0.3 percent to 7.0453 per dollar

• The Australian dollar was little changed at $0.6819

Cryptocurrencies

• Bitcoin rose 0.8% to $63,565.84

• Ether rose 1.1% to $2,493.88

BONDS

• The 10-year Treasury yield was little changed at 3.71%

• Japan’s 10-year yield was unchanged at 0.850%

• Australia’s 10-year yield was little changed at 3.92%

commodities

• West Texas Intermediate crude was little changed

• Spot gold rose 0.2% to $2,592.04 an ounce

This story was produced with the help of Bloomberg Automation.

–With help from Winnie Hsu.

Bloomberg Businessweek’s most read

©2024 Bloomberg LP