World stock indexes rise on optimistic news
2023.01.18 13:04
World stock indexes rise on optimistic news
By Ray Johnson
Budrigannews.com – While economic and earnings data proved encouraging for European markets on Wednesday, the Bank of Japan stifled hopes that it could move away from its ultra-loose stance, causing world stocks to rise and the Japanese yen to fall.
The most recent indication that global inflationary pressures are decreasing is the data that showed British inflation fell to a three-month low of 10.5% in December.
Europe’s index rose 0.4% to its highest level since April 2022, helped along by a series of positive earnings updates.
According to BofA Global Research European equity strategist Andreas Bruckner, three factors have pushed stock markets higher: economic data that showed businesses working overtime to deal with order backlogs, an expectation for a dovish pivot from the U.S. Federal Reserve, and China’s economy reopening faster than anticipated following COVID-19 lockdowns
Bruckner stated, “But it will be impossible to mask an underlying weakness in economic demand, so the sugar high that markets are on will eventually disappear.”
After the most recent figures on UK inflation, London’s international-focused stock reached a 4-1/2-year high, just shy of its all-time high. However, concerns about tight monetary policy persisted as the rate remained in double-digit territory.
MSCI’s broadest index of Asia-Pacific shares outside of Japan gained 0.26 percent earlier in the day.
The spotlight also fell on Japan, where policymakers decided to maintain yield curve controls, resulting in a sharp decline in government bond yields and a fall in the yen.
At its lowest point, the 10-year yield dropped as much as 14 basis points to 0.36 percent, which would have been the biggest one-day drop since September 2003. However, it eventually returned to 0.41 percent. Prior to the Bank of Japan’s decision, the yield was 0.51 percent.
At 129.11, the dollar was up 0.78 percent against the Japanese yen, up to 2.7% at one point.
Ben Jones, director of macro research at Invesco EMEA, stated, “The BOJ should remain a focus in the coming months with eyes on who will replace its incumbent Governor Haruhiko Kuroda.”
Jones stated, “There’s more room for the yen to run higher over the medium term” following today.
He stated that the BOJ may only be beginning its efforts to contain inflation in comparison to the series of rate hikes that the United States Federal Reserve has implemented.
According to Jones, “Japanese investors have started to repatriate money, moving out of U.S. equities and credit and returning it to home markets.”
The, which compares the safe-haven currency to six other currencies, lost 0.26 percent. It has recently been undermined by falling bond yields in the United States, with markets betting that the Federal Reserve can be less aggressive in raising rates.
As the improved risk sentiment sparked by the Bank of Japan spread throughout currency markets, the pound gained more than 0.6 percent and the euro gained 0.4 percent.
The optimism that China’s lifting of its strict COVID-19 curbs will result in a recovery in fuel demand in the world’s largest oil importer drove oil prices higher, extending gains from the previous session.
After a 1.7 percent rise in the previous session, futures rose 0.5 percent to $87.23 a barrel.
As investors bet on the country’s rapid recovery following the lifting of COVID-19 lockdowns, foreign buying of Chinese stocks has exceeded last year’s total in less than three weeks of 2023.
After three years of pandemic isolation, China’s Vice Premier Liu He said he welcomed foreign investment and declared his nation open to the world.
According to data released on Tuesday, China’s economic growth had slowed to 3.0% in 2022, the lowest rate in nearly 50 years.
increased by more than 0.5 percent to $1,918 per ounce., while the three-month London Metal Exchange price of $9,367.50 a tonne, a seven-month high, was up 0.9 percent.
