Stocks Extend Rally; BOJ Stays Pat

The rally in stocks continued Thursday, spurred by all-time highs for U.S. equities and as the Bank of Japan maintained its mega monetary stimulus. The yen fell and the Australian dollar reversed an advance that saw it jump toward 80 U.S. cents after a jobs report.

European equity index futures rose along with markets from Tokyo to Sydney, and the MSCI All-Country World Index traded at a record high. With the Bank of Japan delaying the time-frame for reaching its inflation target — a sign its stimulus is in place for a while to come — attention turns to the European Central Bank’s meeting for clues on policy paths. Oil held onto gains as stockpiles decreased. The U.S. dollar strengthened for a second day after hitting a 10-month low, though was still down for the week.

Like the BOJ, the ECB is forecast to keep policy on hold Thursday. A report that the bank has been examining options for asset purchases does add to speculation that Mario Draghi will concede time is approaching to adjust the bond-buying program as the economic recovery expands.

U.S. benchmark bond yields are falling this week with the dollar as investors pare expectations for progress on President Donald Trump’s policy agenda. Markets have trimmed expectations for Federal Reserve rate hikes to less than 50 percent by year-end despite assertions from policy makers that another increase seemed appropriate.

Here are the main moves in markets:

Stocks

· The MSCI ACWI Index was steady at its record high as of 2:15 p.m. in Hong Kong. Australia’s S&P/ASX 200 Index gained 0.5 percent and Japan’s Topix Index rose 0.7 percent to its highest in nearly two years.

· Hong Kong’s Hang Seng Index added 0.4 percent, as did the Shanghai Composite Index.

· S&P 500 futures were little changed after the underlying gauge rose 0.5 percent to a record 2,473.83 on Wednesday. Euro Stoxx 50 futures climbed 0.5 percent after the index closed up 0.6 percent. Futures for the FTSE 100, which also gained 0.6 percent yesterday, advanced 0.3 percent.

· The VIX index closed below 10 for a record fifth consecutive day.

Currencies and bonds

· The Aussie traded down 0.3 percent at 79.31 U.S. cents after reaching a two-year high of 79.89 cents as a characteristically volatile monthly jobs report for June showed a surge in full-time employment. It’s the best-performing G-10 currency this year, climbing more than 10 percent.

· The yen slipped 0.2 percent to 112.13 per dollar. The pound and euro were flat. The Bloomberg Dollar Spot index gained 0.2 percent, paring its weekly loss to 0.2 percent.

Commodities

· WTI crude was flat after surging 1.5 percent Wednesday when government data showed U.S. crude and gasoline stockpiles continue to fall, allaying anxiety about a supply glut.

· Gold was 0.2 percent lower at $1,238.46 an ounce.

Source: Bloomberg

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