Global stock markets, as evidenced by the MSCI All Country stock index (ACWI) tracking shares in nearly 50 countries, experienced a rise of 0.72% to 705.13 points on Friday, marking a nearly 17% gain year-to-date. This followed the Bank of Japan’s decision to modify its expansive monetary policy, aligning more closely with other major central banks’ aggressive rate-hiking strategies to curb inflation.
Date: July 29, 2023
Place: New Delhi, India
On the same day, the Bank of Japan increased its offer to buy 10-year Japanese government bonds past the previous 0.5% target rate. It maintained its benchmark short-term rate at -0.1% and long-term bond yields at zero, matching the actions of the U.S. Federal Reserve and European Central Bank. Both institutions had declared interest rate hikes earlier this week, leading markets to anticipate the conclusion of the rate-increase cycle.
Data from the U.S. Commerce Department demonstrated a significant deceleration in U.S. inflation. The personal consumption expenditures price index rose by 3% in the year leading up to June, the smallest annual increment since March 2021. This slowing inflation trend appears to accompany resilient economic growth, which, according to Garrett Melson, portfolio strategist at Natixis Investment Managers, is a promising sign for a soft landing.
U.S. Treasury yields receded following a two-week high in the previous session. Yields on 10-year Treasury notes decreased to 3.957%, while two-year yields fell to 4.8786%.
Equity performance was robust on Wall Street. The Dow Jones Industrial Average (.DJI) rose by 0.5% to 35,459.29 points, the S&P 500 (.SPX) increased by 0.99% to 4,582.23 points, and the Nasdaq Composite (.IXIC) climbed 1.9% to 14,316.66 points. The advances were led by technology, communication services, and consumer discretionary stocks.
In contrast, European stocks (.STOXX) slightly declined by 0.2% following a 17-month peak achieved on Thursday when the ECB escalated interest rates to a level unseen in over two decades.
The MSCI’s broadest index in the Asia-Pacific region concluded the day 0.42% higher, despite Japan’s Nikkei (.N225) falling 0.40%.
In currency markets, the yen experienced its most unpredictable trading session months after the Bank of Japan’s decision, weakening by 1.18% against the dollar at 141.08 per dollar. The dollar index fell 0.059%, while the euro appreciated by 0.45% to $1.1022.
The optimism over robust demand and supply cuts in the oil market prompted a fifth week of consecutive gains. Brent crude oil prices increased by 75 cents to $84.99 per barrel, while U.S. West Texas Intermediate (WTI) crude rose by 49 cents to $80.58 per barrel.
Finally, gold prices also saw an uptick, with spot gold gaining 0.7% to $1,959.18 an ounce and U.S. gold futures increasing by 0.66% to $1,958.50 an ounce. The rise came following a notable decline in the last session, buoyed by a minor pullback in the dollar.”
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Sources- The Financial Express, Reuters, The Print
