Comments
World stocks hit near nine-month highs on Thursday as talk of another super-sized shot of stimulus from Japan helped buoy the mood ahead of the European Central Bank's first post-Brexit meeting.
The yen had hit a six-week low on reports Tokyo was considering a package of at least 20 trillion yen to boost the economy. It later jumped 1 per cent, however, after Bank of Japan chief Haruhiko Kuroda ruled out “helicopter money" which would effectively give cash directly to the population.
MSCI's 46-country All-World share index was at its highest level since early November as Europe's main bourses started the day broadly steady despite a tumble in airline stocks.
Industry bellwethers easyJet and Lufthansa both warned of a worsening outlook, with the German firm dropping over 6 per cent after saying bookings had been hit hard by “terrorist attacks in Europe and greater political and economic uncertainty".
ECB policy meet
ECB policymakers meeting in Frankfurt must consider a list of concerns, including the impact of Britain's vote to leave the European Union, a potential Italian banking crisis and suggestions the ECB is running out of policy ammunition.
The euro was touch higher at $1.1025 having fallen for 10 of the last 14 weeks, while German and other core euro zone government bond yields nudged up to their highest levels of the month so far.
“We are not expecting anything in terms of action from the ECB today because Draghi and his colleagues won't have had enough data to see an impact of the UK EU referendum vote,” said Vasileios Gkionakis, head of FX strategy at UniCredit in London.
“We think a some point between September to December we will get another extension of the QE programme in terms of timeframe, but we don't think they will go down the line of another deposit rate cut.”
State of emergency
Turkish assets struggled again after President Tayyip Erdogan declared a state of emergency on Wednesday, widening a crackdown against thousands of members of the security forces, judiciary, civil service and academia after Friday's failed military coup.
Istanbul's main stock market slumped 3.3 per cent in a fourth day of falls, although the lira managed to claw back 0.25 per cent after plunging below the big figure of 3 to the dollar.
Turkey apart, emerging markets are enjoying a hot streak. Inflows to EM assets hit their highest level in nearly three years last week, according to the latest survey by the Institute of International Finance.
Big in Japan
Futures prices pointed to a steady start for record high Wall Street markets when they resume later.
Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan had risen to its highest level since October 2015, taking gains over the last month past 10 per cent in the process.
Japan's Nikkei stock index outperformed as it rose 1 per cent on reports that the government is to compile a stimulus package of at least 20 trillion yen to help the economy.
“What the market wants now is both fiscal and monetary policy and such expectations are getting higher,” said Hikaru Sato, a senior technical analyst at Daiwa Securities.
Dollar vs yen
The dollar rose 0.2 per cent to 107 yen after climbing as high as 107.460 earlier, its highest since June 7 and returning to levels seen before markets were roiled by Britain's vote last month to exit the European Union.
The dollar index, which tracks the greenback against a basket of six main world currencies, dipped in Europe to 96.884 having touched its highest level since early March on Wednesday.
Crude oil
In commodity markets, oil was beginning to backslide. Brent crude nudged back towards $47 a barrel having been as high as $47.35 in Asia, while US crude was flat at $45.73 a barrel.
That gave a boost to safe-haven gold, which edged up 0.3 per cent to $1,320 an ounce after plumbing three-week lows on Wednesday.
“With gold looking increasingly shaky on the charts, all eyes will turn to the ECB policy meeting,” said INTL FCStone analyst Edward Meir.
“Should the central bank signal a more accommodative policy, we could see gold get a bit of a lift despite the fact that the dollar could strengthen as a result.”
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.