LONDON (Reuters) – The yen rose on Friday and the largest increase in yields on Japanese bonds in the years up costs of sovereign borrowing around the world, after the Bank of the latest measures of Japan to boost growth and inflation reached expectations of investors.
Investors also digested a heavy number of benefits for European companies dominated by some of the largest banks in the region and awaited the first estimate of US growth in the second quarter.
The fall of the dollar against the yen, the steepest in a month and the fourth most pronounced this year, fell against other currencies, ranking the exchange rate of the dollar’s trade-weighted on course for its biggest weekly drop in two months.
The absorbed actions BOJ decision a little easier, partly because the central bank increased purchases of exchange-traded funds (ETF) in its package softened. Japan’s Nikkei rose, and European indexes rose on the back of better than expected results from Barclays (L: BARC) and UBS (S: UBSG).
“The Bank of Japan did not increase bond purchases is important and will disappoint those seeking coordination of monetary and fiscal policies,” said Adam Cole, head of FX strategy at RBC Capital Markets.
“While the increased purchases of the ETF is useful, it still represents a very small proportion of the overall package of easing,” said Cole, noting that the Bank of Japan has left the door open to further easing, but not able to prevent the yen from meeting to promote.
The BOJ purchases of ETFs increased moderately, but maintains its objective of monetary base 80 billion yen (US $ 775 million) and the pace of purchases of other assets, including Japanese government.
The central bank also kept at 0.1 percent interest it charges a portion of overbooking leave financial institutions at the central bank.
The dollar fell 1.8 percent to ¥ 103.35, its biggest daily drop since June 24 – the day after the decision of the UK to leave the European Union – have fallen below 103.00 previous.
The dollar index fell 0.4 percent to 96.33 (DXY), while the euro rose 0.2 percent to just under $ 1.11.
bond yields to 10 years in Japan rose 10 basis points, to -0.17 percent (JP10YT = RR), on course for its biggest daily rise since April 2008.
The Nikkei (N225) Japan Index, which bobbed in and out of the red zone after the announcement, closed up 0.56 percent to 16,569 points. The index, which hit a seven-week high last week, rose 6.4 percent in July, its best month since October last year.
The MSCI (MIAPJ0000PUS) index of Asian stocks outside Japan fell 0.64 percent, dropping back to its highest level since Aug. 11 hit earlier in the day.
The leading 300 European stocks (FTEU3) index rose 0.4 percent to 1,244 points and the German DAX (GDAXI) also increased by 0.4 percent.
Finance led the way, with the euro area banking index up more than 2 percent (SX7E) and on the way to an increase of nearly 8 percent in July, its best month since February.
Barclays shares rose 5 percent despite the first-half profit fell 21 percent and UBS shares rose 3 percent despite a drop of 14.5 percent in its second quarter earnings. Both sets of results were not as bleak as investors had feared.
Investors awaited the release of the results of stress tests on European banks on Friday night.
Wall Street stocks remained near their all time highs, with technology heavyweights alphabet (O: GOOGL) and Amazon (O: AMZN) that rises after the bell because their income exceeded expectations.
Futures pointed to a drop of about 0.2 percent at the opening of Wall Street on Friday. (ESC1) just before the first estimate of US Q2 is released gross domestic product.
Economists expect a rise to 2.6 percent from 1.1 percent in the first quarter, although GDP of close harmony Atlanta Fed estimate now follow on Thursday fell to 1.8 percent from 2.3 percent. [ECONUS]
“Although we continue to look for equipment spending to remain soft in Q2, real consumption should show a strong rebound,” Societe Generale (PA: SOGN) economists wrote in a note to clients.
The US Treasury yield 10-year rose two basis points to 1.53 percent (US10YT = RR)
In other markets, oil prices fell to three-month lows, with the benchmark US It has fallen more than 20 percent from the peak of this year on growing concern that the world could be pumping more oil it needs.
Futures US crude fell to a low of $ 40.75 per barrel (CLc1), and were last up 0.9 percent at $ 40.77. Brent crude (LCOc1) fell 1.1 percent to $ 42.22. It is up 7.6 percent this week and 15 percent this month.