The Euro and the Yen rose; Japanese stocks extended a rally
Japanese stocks extended a rally in global equities even as the yen rose to its strongest in 15 months, with trading muted due to holiday closures across Asia.
Australian shares closed slightly lower, but with most major markets across Asia Pacific shut for Lunar New Year holidays, volumes in the region were light. The S&P 500 topped 2,700 Thursday as U.S. equities capped their best five-day run since 2011. Japan’s currency pushed past 106 yen per dollar for the first time since November 2016 on a day when Prime Minister Shinzo Abe nominated Haruhiko Kuroda to lead the Bank of Japan for another five-year term. The yield on 10-year Treasuries hovered near 2.9 percent and the dollar traded lower against all major currencies.
Investors seem convinced that even though borrowing costs are on the rise, they are not yet at levels that would hinder equities, especially with the economy gathering pace. As a growing number of economists now expect the Federal Reserve to step up the pace of its interest-rate increases this year, a report this week showing faster consumer-price increases gave rise to debate on the breakdown in the greenback’s correlation to interest rates, as currency investors focused instead on the U.S.’s twin deficits.
The S&P 500 closed at a two-week high and above its 50-day moving average after climbing about 6 percent in the past five days. Over in the bond market, it’s been a rough 2018 for investors. The Bloomberg Barclays U.S. Treasury Index has lost about $67 billion in market value since the start of the year, data compiled by Bloomberg show.
Elsewhere, crude oil climbed to a one-week high as the slumping greenback increased the appeal of dollar-priced commodities. Bitcoin extended gains, trading above $10,000.
Important things to watch out for during the remainder of this week:
- A handful of European Central Bank officials are due to speak Friday.
- Lunar New Year celebrations for the Year of the Dog have begun, affecting China, Hong Kong, Taiwan, Singapore, Malaysia and Indonesia. Chinese mainland markets are closed Feb. 15-21.
These are the main moves in markets:
- Japan’s Topix index rose 1.1 percent as of 3:05 p.m. in Tokyo.
- Australia’s S&P/ASX 200 Index fell 0.1 percent.
- Futures on the S&P 500 rose 0.1 percent after the underlying gauge climbed 1.2 percent on Thursday.
- The Bloomberg Dollar Spot Index fell 0.3 percent.
- The euro rose 0.3 percent to $1.2546.
- The yen rose 0.4 percent to 105.71 per dollar.
- The yield on 10-year Treasuries was little changed at 2.9 percent, near the highest in more than four years.
- Australia’s 10-year yield was little changed at 2.92 percent.
- West Texas Intermediate crude rose 0.4 percent to $61.67 a barrel.
- Gold rose 0.3 percent to $1,358.33 an ounce.