BS: Yen Slides as Stocks Jump With U.S. Futures on BOJ
The yen plunged to a six-year low while stocks jumped with U.S. equity-index futures as the Bank of Japan unexpectedly increased its target for monetary stimulus. Gold fell as bonds from Italy to Portugal climbed.
Japan’s currency tumbled 2.3 percent to 111.77 per dollar by 7:22 a.m. in New York, the weakest since January 2008. The Stoxx Europe 600 Index added 1.4 percent, Japan’s Topix index jumped the most since June 2013 and Standard & Poor’s 500 Index futures signaled the gauge may rise to a record. Yields on 10-year notes in Italy, Spain, Portugal and Greece slid at least five basis points. The ruble stayed weaker and bonds fell after Russia raised rates more than forecast. Gold slid as much as 2.6 percent to the lowest price since July 2010.
The BOJ said it will increase holdings of government bonds by 80 trillion yen ($723 billion) and boost exchange-traded fund purchases to 3 trillion yen. Adding impetus to the stock rally, Japan’s public pension fund, the world’s biggest, boosted its target for equity holdings today. Exxon Mobil Corp. and Chevron Corp. are among companies reporting earnings today.
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“If they wanted a big reaction in dollar-yen, they definitely succeeded,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. “Very few were looking for new initiatives from the BOJ today, so that’s the reason we see a much a weaker yen, and also a strong increase in Japanese equities.”
Narrow Vote
In the first policy change since Governor Haruhiko Kuroda began record asset purchases in April last year, the BOJ boosted its annual target for expanding the monetary base to 80 trillion yen from 60 to 70 trillion yen before, according to a statement in Tokyo today. The board was split 5 to 4 on the decision. Only 3 of 32 economists surveyed by Bloomberg News forecast the BOJ would expand stimulus today.
Japan’s Topix index jumped 4.3 percent, the most since June 2013, and the Nikkei 225 Stock Average closed at a seven-year high.
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More than 10 shares advanced for every one that declined in the Stoxx 600, with trading volumes 13 percent greater than the 30-day average, according to data compiled by Bloomberg. The gain trimmed its decline in October to 2.3 percent, the worst month since June 2013.
BNP Profit
BNP Paribas SA, France’s largest bank, gained 3 percent after saying profit rose 11 percent in the third quarter, exceeding analysts’ estimates. Royal Bank of Scotland Group Plc, Britain’s largest taxpayer-owned lender, rose 2.8 percent after reporting third-quarter earnings that beat projections.
Bank of Ireland Plc climbed 2.7 percent after saying it continued to generate capital at a “significant pace” in the third quarter after returning to underlying profit this year for the first time since 2008.
International Consolidated Airlines Group SA advanced 3.5 percent after the parent of British Airways said it boosted third-quarter earnings 30 percent.
Anheuser-Busch InBev NV lost 3 percent after the market of Beck’s and Corona beer reported profit growth that fell short of analysts’ expectations.
Futures on the S&P 500 jumped 1.1 percent after the gauge closed 0.8 percent away from its all-time high reached in September.
About 81 percent of S&P 500 companies that have posted quarterly earnings this season have topped analysts’ estimates for profit, while 60 percent beat sales projections, data compiled by Bloomberg show.
Emerging Markets
The MSCI Emerging Markets Index rose for a fourth day, advancing 0.8 percent. The gauge climbed 3.2 percent this week, the most for the period since March. Indexes in China, Russia, India, Turkey, South Africa and the Czech Republic gained more than 1 percent.
The ruble slid 1.6 percent to 42.3020 per dollar and the yield on 2027 bonds rose 11 basis points to 10.02 percent. The Micex Index increased 1.3 percent. Stocks gained as a weaker ruble boosts earnings prospects for exporters.
The Bank of Russia raised its key rate to 9.5 percent percent from 8 percent, according to a website statement. The move surprised all 31 economists surveyed by Bloomberg. Twenty-two predicted a move to 8.5 percent and two forecast a shift to 9 percent, with increases of a quarter-point and 75 basis points forecast by one each. Five economists saw no change.
