Wild swings in the stock market this week were almost matched in the currency market too, with the yen’s surge to near three-month highs spurred by speculation the Bank of Japan may lift interest rates there on the same day as the Fed decides policy next week.
The yen stepped back a bit on Friday, however, with the dollar/yen pairing recapturing 154 after a Tokyo inflation update that saw core price gains remaining well below the BOJ’s target. The battered Nikkei, which has now lost more than 10% since July 11, failed to catch a break and ended lower on Friday again.
China’s yuan also fell back from Thursday’s peaks as markets tried to figure out whether this week’s surprising spate of easing from People’s Bank of China would be followed up by more stimulus from Beijing to buoy the flagging economy.
Concerns about China’s economy linger even after authorities said on Thursday they would allocate 300 billion yuan ($41.4 billion) in ultra-long treasury bonds to support a programme of equipment upgrades and consumer goods trade-ins.
Benchmark Chinese stocks eked out a small gain on Friday.
The other major central bank meeting next week is the Bank of England. Even though a majority of economists polled think the BoE will cut as soon as August 1, money markets think it’s in the balance and still only ascribe a 50-50 chance.
The pound caught a toehold after retreating to two-week lows yesterday.
Back on Wall Street, Friday’s earnings calendar thins a bit but next week brings another round of Big Tech megacap reports to test growing concerns about valuations and big capex spends on artificial intelligence.
Even though the overall profit growth picture remains buoyant, some single stock earnings day moves continued to be eye-catching.
Ford Motor’s shares tumbled over 13% to a near six-month low on Thursday after the automaker missed estimates as it struggles with quality-related costs and stiff competition in its EV business.
Elsewhere, NatWest gained 8% after the British bank said it would buy Metro Bank’s mortgage portfolio for 2.4 billion pounds.
