Upbeat earnings and U.S. rate cut hopes helped boost the mood in equity markets on Friday, although skittishness prevailed in forex markets a day afte
Upbeat earnings and U.S. rate cut hopes helped boost the mood in equity markets on Friday, although skittishness prevailed in forex markets a day after Tokyo was believed to have stepped in to prop up a weak yen.
U.S. stock futures were mixed, while Europe’s STOXX 600 index rose to a one-month peak and London’s FTSE-100 stock index gained 0.4 per cent. Ericsson rose 8 per cent after the Swedish telecom gear maker reported a smaller-than-expected drop in second-quarter sales.
U.S. earnings kick off later in the day with big banks JPMorgan Chase, Wells Fargo and Citigroup.
That could shift the market focus temporarily away from the U.S. rate outlook, a day after softer-than-expected inflation data boosted bets that the Federal Reserve will cut rates in September.
Markets price in a quarter point cut in September compared to just over a 50 per cent chance a month ago.
“The CPI is good news and obviously, equities to some degree, like it, but we’re seeing other indicators suggest perhaps that things are softening in the U.S.,” said James Rossiter, head of global macro strategy at TD Securities.
“Equities in particular have to look at this kind of potential easing from Fed cuts in September, against a clear pivot going on in the growth picture and for some stock sectors, it’s going to be a bit more of a worry.” The tech-heavy Nasdaq closed almost 2 per cent lower on Thursday, hit by losses in Nvidia, Apple and Tesla as investors rotated into smaller companies after the CPI release.
The yen swung between losses and gains in volatile trade. It surged nearly 3 per cent on Thursday in its biggest daily rise since late 2022, shortly after U.S. consumer price figures revived hopes that the Fed will cut rates in September.
Japan’s top currency diplomat said authorities would take action as needed in the foreign exchange market.
The dollar gained 0.2 per cent to 159.20 yen on Friday, after rising more than 0.3 per cent to an intraday high of 159.45 yen and falling 0.7 per cent to a low of 157.75 yen in Asia trade.
“It’s either one of two things – the market’s either jumping at shadows this morning waiting for a second round of intervention, and I think now that the (Bank of Japan) has committed again, there’s good reason for them to come back,” said Tony Sycamore, a market analyst at IG.
“The second thought is the market’s just really skittish.”
Moves were choppy in the other yen crosses though it subsided over the course of the trading day, with the euro last up 0.3 per cent against the yen and sterling up 0.4 per cent, both reversing early losses.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent, while Japan’s Nikkei fell more than 2 per cent, dragged down by tech stocks.
In China, trade data on Friday was mixed. Exports grew at their fastest pace in 15 months in June, while imports unexpectedly shrank amid weak domestic demand, pointing to the need for further stimulus to shore up the economic recovery.
Markets barely reacted to the figures, with Chinese blue chips rising 0.1 per cent.
Elsewhere, sterling rallied 0.15 per cent to US$1.2932, just shy of a roughly one-year high hit on Thursday, as comments from Bank of England policymakers and a better-than-forecast GDP data led traders to reduce bets on an August rate cut.
Oil prices, meanwhile, rose as signs of strong summer demand and easing inflationary pressures in the United States bolstered investor confidence.
Brent futures ticked up 0.6 per cent to US$85.89 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.7 per cent to US$83.20 a barrel.
Gold edged 0.4 per cent lower to US$2,405 an ounce.
– Reuters
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