Il Nuovo Postiglione - Global stock markets mostly advance, Tokyo tanks as yen rebounds

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Global stock markets mostly advance, Tokyo tanks as yen rebounds

ECONOMY 12.07.2024

Global stock markets mostly advance, Tokyo tanks as yen rebounds / Photo: Richard A. Brooks - AFP

Global stock markets mostly advanced on Friday as traders increasingly expect the US Federal Reserve to cut interest rates.

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Tokyo bucked the trend as the yen shot higher on possible central bank intervention.

Wall Street's main indices rose at the opening bell despite bank shares taking a hit at the start of the earnings season despite beating forecasts.

Shares in Well Fargo tanked 7.2 percent as trading got underway as its retail banking activities flagged and its costs rose more than its revenue.

Shares in JPMorgan Chase, the biggest US bank by assets, fell 2.2 percent as it reported higher costs for bad loans.

Citibank shares fell 1.0 percent.

Meanwhile, data showed US wholesale prices picked up more than expected in June on the back of higher services costs, unwelcome news for monetary policymakers.

A smaller-than-expected US print on the June consumer price index Thursday ramped up bets on easing borrowing costs on the horizon in the world's biggest economy, with investors increasingly pricing in a rate cut in September.

Earlier this week US Federal Reserve Chairman Jerome Powell indicated that the central bank did not need to wait for inflation to fall to its 2.0 percent target to begin lowering interest rates.

European stock markets extended gains on Friday, with shares in Lufthansa sliding 1.3 percent after it cut its earning guidance and warned it may slip into loss.

In Asia, Tokyo tanked 2.5 percent with focus firmly on central bank activity.

Speculation abounds that the Bank of Japan has intervened in foreign exchange markets to boost the yen.

Analysts said the softer US inflation data on Thursday provided Japanese authorities the perfect opportunity to step into forex markets to provide support to the yen, which surged against the dollar.

"The pronounced move in the yen appears to be coming on the back of combined impact from US inflation and intervention by Japanese authorities," Charu Chanana at Saxo Markets told AFP.

"There seems to be a new playbook for Japanese interventions, coming in along with supportive fundamentals, making the strength in yen somewhat more durable."

While speculation swirled about official involvement, Japan's top currency diplomat Masato Kanda told reporters late Thursday that authorities were "not in a position to comment on whether they intervened in the market", according to public broadcaster NHK.

"Objectively speaking, there have been quite rapid fluctuations, which has affected people's lives."

There was little major reaction to data showing Chinese exports surged more than expected last month but imports confounded estimates to increase and fell.

The figures came ahead of next week's Third Plenum, a key meeting of leaders in Beijing that traders hope will see announcements aimed at kick-starting lacklustre economic growth.

The gathering will kick off the same day China is expected to release its gross domestic product figures for the second quarter.

"The success of the Third Plenum hinges on lifting household spending," said Harry Murphy Cruise and Sarah Tan at Moody's Analytics in a note.

"And that means reforms targeting housing, labour markets and tax. To be clear, policy changes are likely to be modest because of budget constraints and fears of reinflating a property bubble."

- Key figures around 1330 GMT -

New York - Dow: UP 0.1 percent at 39,837.82 points

New York - S&P 500: UP 0.1 percent at 5,591.40

New York - Nasdaq Composite: UP 0.1 percent at 18,305.89

London - FTSE 100: UP 0.2 percent at 8,242.47

Paris - CAC 40: UP 0.8 percent at 7,688.49

Frankfurt - DAX: UP 0.4 percent at 18,610.85

EURO STOXX 50: UP 0.6 percent at 5,005.71

Tokyo - Nikkei 225: DOWN 2.5 percent at 41,190.68 (close)

Hong Kong - Hang Seng Index: UP 2.6 percent at 18,293.38 (close)

Shanghai - Composite: FLAT at 2,971.30 (close)

Dollar/yen: DOWN at 158.14 yen from 158.86 yen on Thursday

Euro/dollar: UP at $1.0894 from $1.0870

Pound/dollar: UP at $1.2960 from $1.2912

Euro/pound: DOWN at 84.06 pence from 84.15 pence

Brent North Sea Crude: UP 0.7 percent at $86.00 per barrel

West Texas Intermediate: UP 1.2 percent at $83.57 per barrel

burs-rl/giv

F.M.Buffo--INP

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