Adding to the confusion, and perhaps the greater comfort that more interest rate cuts are coming in the second half, is the fact that the aggregate global economic surprise index has turned negative to the worst reading in almost a year.
What’s more, the hesitant business move in Europe was underlined on Monday as Germany’s Ifo institute showed business morale falling unexpectedly. Ifo’s business climate index sank to 88.6 in June from 89.3 in May, compared with a reading of 89.7 forecast.
But the real market price action was in Japan’s yen, which skidded again to within a whisker of the 160 per dollar – close to 34-year low of 160.245 it set in April before the Bank of Japan intervened to prop it up.
Japan’s top currency diplomat Masato Kanda said on Monday authorities would take appropriate steps if there was excessive foreign exchange movement, and that the addition of Japan to the U.S. Treasury’s “monitoring list” would not restrict their actions.
Treasury last week said no major trading partner appeared to have manipulated its currency last year, but it added Japan to a foreign exchange monitoring list alongside China, Vietnam, Taiwan, Malaysia, Singapore and Germany, which were on the previous list.
A summary of opinions at the BOJ’s June policy meeting, meantime, showed some policymakers called for raising interest rates in a timely fashion as they saw a risk of inflation overshooting expectations.
Although Japan’s Nikkei lapped up the weak yen and climbed 0.5%, signs of renewed foreign capital flight and rising global trade tensions saw China’s ailing markets underperform yet again.
The mainland CSI300 dropped 0.5% on Monday and the offshore yuan hit its weakest level of the year.
In company news, Apple’s App Store rules breach EU tech rules because they prevent app developers from steering consumers to alternative offers, EU antitrust regulators said on Monday, a charge that could result in a hefty fine for the iPhone maker.
Other big movers included Eurofins Scientific, which dropped as much as 19% after short seller Muddy Waters said it took a short position out on the French testing company.
Britain’s Prudential added 6.3% after the insurance group launched a $2 billion share buyback programme.
