(Bloomberg) — A small change in policy settings from the Bank of Japan caused the yen to fall by the most in two months, disappointing some in the market who had hoped for more.
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Japan’s currency fell by more than 150 yen to the dollar, but Japanese stocks rose after the central bank decided to keep the cap on long-term yields at 1% and leave negative interest rates unchanged. US Treasuries rose.
European stocks suffered their worst month since September 2022. BP suffered its biggest decline in about six months as profits fell short of expectations. U.S. stock futures fell slightly following Wall Street’s gains on Monday. Asian stocks fell as Chinese manufacturing indicators contracted.
Investors are also paying close attention to developments in the Middle East. Israel attacked targets in Lebanon and stepped up ground operations in Gaza on Tuesday as Prime Minister Benjamin Netanyahu rejected a ceasefire. Brent crude rose 0.5%, recouping some of Monday’s losses.
The dollar strengthened against the Group of Ten (G10) nations, halting a two-day decline in the U.S. currency according to a Bloomberg index. The rise in U.S. Treasuries was helped by the U.S. Treasury on Monday lowering its federal borrowing outlook for the current quarter, citing higher-than-expected revenue.
The Bank of Japan plans to take a more flexible approach to controlling 10-year government bond yields, the statement said. This is a change from the previous pledge to carry out daily bond purchases at 1%, and is effectively a line in the sand at that level. The Nikkei Shimbun earlier reported that the Bank of Japan would consider raising yields above the 1% ceiling.
“The dollar-yen seems disappointed with the extent of the correction,” especially after the Nikkei report, said Carol Conn, a strategist at Commonwealth Bank of Australia in Sydney. “The statement also reiterates that the Bank of Japan will continue patiently with monetary easing, continuing to create a dovish tone.”
On a busy day of European earnings, BP said third-quarter profits rebounded from the previous period but were lower than expected as weak results from gas marketing offset strong results from oil trading. Anheuser-Busch InBev NV rose after the company left its full-year profit forecast unchanged.
Meanwhile, disappointing economic data released by China on Tuesday also weighed on sentiment.
“The October manufacturing PMI slipping into contraction territory seems to have disappointed the market, raising some doubts about the strength of the macro recovery,” said Marvin Chen, an analyst at Bloomberg Intelligence in Hong Kong. “I’m letting them do it,” he said.
This week’s main events:
Eurozone CPI, GDP, Tuesday
US Conference Board Consumer Confidence Index, Employment Cost Index, Tuesday
China Caixin Manufacturing PMI Wednesday
UK S&P Global/CIPS UK Manufacturing PMI Wednesday
US construction spending, ISM manufacturing, job openings, light vehicle sales, Wednesday
In many parts of Europe, Wednesday is All Saints’ Feast.
Treasury quarterly refund announcement Wednesday
Federal Reserve Board Interest Rate Decisions. Federal Reserve Chairman Jerome Powell holds a press conference on Wednesday
Eurozone S&P World Eurozone Manufacturing PMI, Thursday
Bank of England interest rate decisions.Governor Andrew Bailey holds press conference Thursday
U.S. factory orders, new unemployment insurance claims, productivity, Thursday
Apple’s earnings, Thursday
China Caixin releases PMI on Friday
Eurozone unemployment rate, Friday
U.S. unemployment rate, nonfarm payrolls, Friday
Friday’s Canadian Employment Report
The main movements in the market are:
As of 8:14 a.m. London time, the Stoxx European 600 was up 0.2%.
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.4%
Dow Jones Industrial Average futures little changed
MSCI Asia Pacific Index falls 0.6%
MSCI Emerging Markets Index falls 0.7%
Bloomberg Dollar Spot Index rose 0.1%
The euro was almost unchanged at $1.0624.
The Japanese yen fell 0.9% to 150.41 yen to the dollar.
The offshore yuan fell 0.1% to 7.3347 yuan to the dollar.
The British pound fell 0.1% to $1.2153.
Bitcoin fell 0.7% to $34,214.24.
Ether fell 0.5% to $1,792.85.
The 10-year Treasury yield fell 5 basis points to 4.84%.
Germany’s 10-year bond yield fell 3 basis points to 2.79%.
UK 10-year bond yields fell 5 basis points to 4.51%.
This article was produced in partnership with Bloomberg Automation.
–With assistance from Matthew Burgess, Winnie Hsu, and Zhu Lin.
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