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Stocks recover as relative calm is restored

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The nervousness that has gripped markets in recent days is receding somewhat, with stocks higher in Asia and government bond yields pulling back from record-low levels. European equities are expected to follow suit.

Japanese bourses were outperforming peers, with the Nikkei 225 ahead by 1.1 per cent. The recovery came after a slump of about 3 per cent on Thursday as the Bank of Japan’s decision to refrain from easing monetary policy further spurred the yen to its highest level in 22 months, of ¥103.55 (£0.69) to the dollar. That was unwelcome news for shares of the nation’s exporters.

On Friday the yen was 0.1 per cent weaker at ¥104.41 (£0.70) per dollar but still set for a gain of 2.4 per cent for the week. The Topix and Nikkei 225 were down each down 5.7 per cent so far this week, heading for their largest weekly declines since February 12.

According to opening calls from CMC, the FTSE 100 will open up 49 points in London, while Frankfurt’s Xetra Dax is set for a 113-point opening gain.

The dollar is slipping more widely, with the euro up 0.2 per cent at $1.1249 (£0.79), while the pound is 0.4 per cent strongest at $1.4254 (£1.00). The index tracking the world’s reserve currency against six of its peers is down 0.1 per cent overall, eyeing its third straight day of declines, as investors continued to process Wednesday’s dovish policy statement from the Fed.

Central banks remain one of the main talking points after policy calls this week from three of the world’s major monetary guardians. The Fed, the Bank of England and the BoJ all kept policy on hold.

Analysts at Nomura said the yen’s recent rise may be one reason the BoJ has decided against further monetary policy easing.

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Paul

The author Paul