Yen Slides as Stocks Climb With S&P 500 Futures on BOJStephen Kirkland
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 2.5 percent to 111.96 per dollar by 9:03 a.m. in New York, the weakest since January 2008. The Stoxx Europe 600 Index added 1.5 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 weakened even after the central bank raised rates more than forecast. Gold slid as much as 2.6 percent to the lowest price since July 2010.
The BOJ boosted its annual target for enlarging the monetary base to 80 trillion yen ($724 billion) from 60 to 70 trillion yen, the central bank said. Adding impetus to the stock rally, Japan’s public pension fund, the world’s biggest, boosted its target for equity holdings today. S&P 500 futures kept gains even after a report showed U.S. consumer spending unexpectedly dropped as incomes rose at the slowest pace of the year.
“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.”
In the first policy change since Governor Haruhiko Kuroda began record asset purchases in April last year, 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.
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 2.1 percent, the worst month since June 2013.
BNP Paribas SA, France’s largest bank, gained 4 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 4.7 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 4 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.
A Commerce Department report showed expenditures decreased 0.2 percent last month, weaker than any economist projected in a Bloomberg survey, after rising 0.5 percent in August. Incomes increased 0.2 percent, the smallest gain since December, the data showed.
Exxon Mobil Corp. rose 1.1 percent after reporting earnings that beat analysts’ estimates. 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.
The MSCI Emerging Markets Index rose for a fourth day, advancing 0.5 percent. The gauge climbed 3 percent this week, the most for the period since March. Indexes in China, Russia, India, Turkey, South Africa, Poland and the Czech Republic gained more than 1 percent.
The ruble slid 3.4 percent to 43.0860 per dollar while the yield on 2027 bonds rose six basis points to 9.97 percent. The Micex Index increased 1.8 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.
The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong added 1.2 percent before the release of official manufacturing data tomorrow. The Shanghai Composite Index also rose 1.2 percent, capping a 2.4 percent gain in October, its six monthly advance and longest run since July 2009.
The Purchasing Managers’ Index from the National Bureau of Statistics and China Federation of Logistics & Purchasing probably rose to 51.2 in October, up from 51.1 in September. A reading of more than 50 indicates expansion.
India’s Sensex climbed to a record high amid expectations Prime Minister Narendra Modi will accelerate policy changes. The jumped 4.6 percent this month, the most since June.
Gold tumbled 2.7 percent to $1,166.50 an ounce, bringing this month’s decline to 3.5 percent, headed for the first consecutive monthly declines this year. Silver plunged as much as 3 percent to the lowest price since February 2010.
West Texas Intermediate crude oil fell 1.3 percent to $80.10 a barrel in New York, declining for a second day and headed for a 12 percent monthly decline amid signs OPEC boosted production.
U.K. gas prices fell the most in more than a month after Russia agreed to restore supplies to Ukraine, just as Europe enters its peak demand season. The December contract slid as much as 2.7 percent on ICE Futures Europe.
The yield on Italian 10-year debt dropped seven basis points to 2.39 percent. Spain’s 10-year rate fell six basis points to 2.10 percent. Greece’s declined eight basis points to 8 percent after jumping 51 basis points yesterday.
Treasuries slipped on reduced demand for haven assets, with the 10-year note yield climbing three basis points to 2.34 percent.
The cost of insuring corporate debt fell. The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies fell two basis points to 66, while the region’s high-yield benchmark declined seven basis points to 357. Both measures are the lowest since they started trading Oct. 6.