European stocks rose to a four-week high amid optimism the Bank of Japan’s (BOJ) stimulus would fill some of the gap left by the end of US Federal Reserve bond buying.
The STOXX Europe 600 Index gained 1.8 percent to 336.8 at the close of trading on Friday, boosting its weekly advance to 2.9 percent, the most this year. Barclays PLC and BNP Paribas SA led lenders higher, as all 19 industry groups on the gauge climbed.
The equity benchmark dropped 1.8 percent last month, the most since June last year, amid concern that the European Central Bank’s (ECB) asset purchases would not be enough to revive the region’s economy. With the US Federal Reserve ending purchases this month, investors are turning to Europe and Japan for sustained support.
The BOJ unexpectedly boosted its stimulus, raising its annual target for monetary expansion to ￥80 trillion (US$717 billion), up from ￥60 trillion to ￥70 trillion.
“Markets don’t really seem to care about what kind of stimulus we get or where it’s coming from, as long we get something,” said Teis Knuthsen, chief investment officer at Saxo Bank A/S’s private-banking unit.
“Central banks are trying to squeeze money into the system and as long as economic growth is good enough, all that money will be going into financial assets. What happened in Japan is very powerful for equities, and it’s really rippling throughout global markets,” Knuthsen added.
Investors weighed a report that showed euro-area inflation increased this month for clues about the ECB’s policy stance at its meeting next week. The central bank aims to take inflation closer to 2 percent, while the rate has stayed below 1 percent for a year.
Benchmark indices in 16 of the 18 Western European markets rose on Friday. The UK’s FTSE 100 gained 1.3 percent, while France’s CAC 40 advanced 2.2 percent. Germany’s DAX rallied 2.3 percent.
Barclays rallied 8.2 percent to ￡2.408 for its biggest increase since February last year, after saying it is confident of reaching the leverage ratio set by the Bank of England. The central bank on Friday set a minimum level of 4.05 percent from 2019, lower than analysts estimated.
BNP Paribas rose 3.5 percent to 50.14 euros after posting an 11 percent gain in third-quarter profit that exceeded analysts’ estimates. Net income was 1.5 billion euros (US$1.89 billion), up from 1.36 billion euros a year earlier, the lender said. Loan-loss provisions fell 9.2 percent.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS