Disappointing earnings reports from some of the world's biggest tech
companies and fresh emission-test troubles for Europe's auto makers
meant a low-key day at the end of a positive week for the world's
main stock markets.
Wall Street, which is back near record highs, was set to reopen
virtually flat. Traders were looking over General Electric and
Honeywell earnings and waiting on manufacturing data, after
lackluster numbers from Google's parent wiped $32 billion off its
value on Thursday.
Euro zone business data earlier had showed an unexpected slowdown in
April. Meanwhile, the bloc's finance chiefs met in Amsterdam to
discuss whether Greece was making the necessary progress. The head
of the International Monetary Fund said it wasn't.
The big market move come from Japan though. A Bloomberg report that
the central bank might go further with negative interest rates
caused the yen to fall more than 1 percent, to 110.34 yen per dollar
and 124.93 to the euro.
The Bank of Japan, which meets next week, has two lending
facilities. One offers banks zero-interest funding for loans to
companies in high-growth industries and one provides zero-interest
long-term funds to banks that increase lending more generally.
The BOJ would consider applying negative rates on both facilities,
Bloomberg reported - paying commercial banks to accept funding.
"That puts a different light on the BOJ meeting and suggests they
might be more creative than the markets had given them credit for,"
said Rabobank FX strategist Jane Foley. "Clearly we have seen the
yen suffer on the back of that."
The Federal Reserve also meets next week. Healthy markets and
reassuring data over the past month have left many investors
wondering whether they might have been too quick in pricing out an
increase in U.S. rates this year.
Manufacturing purchasing manager data in the U.S. due at 1345 GMT
will provide the latest fodder for that debate after a rebound in
ISM figures this week.
German Bund and U.S. Treasury yields were on course for weekly
gains, although they slipped on Friday in reaction to the BOJ talk.
The bond market has also been tracking oil prices because of their
impact on inflation, and crude is up by more than two-thirds from
its $27 a barrel low in January.
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European shares were down 0.3 percent ahead of the U.S. open.
Car stocks fell as Daimler said it was investigating its U.S.
emissions and PSA Peugeot Citroen said it had been raided by French
anti-fraud investigators over its emissions.
In Asia, the BOJ speculation helped Tokyo's Nikkei end the day up
1.2 percent at an 11 1/2-week high.
MSCI's broadest index of Asia-Pacific shares outside Japan dropped
0.8 percent, mostly as traders cashed in on the 5 1/2-month high
reached on Thursday.
Commodity markets were also taking a breather from their recent hot
Brent crude futures hovered at just under $45 a barrel after
gains of just over 4 percent this week. U.S. crude rose 1 percent to
$43.58, up 8 percent on the week.
Among commodity currencies, the Australian dollar advanced 0.2
percent to $0.7754, off its 10-month high of $0.7836 touched the
Gold slipped and silver pared gains as the dollar strengthened, but
both were still headed for weekly gains. Silver rose to an 11
1/2-month high earlier this week, while industrial metal copper was
set for a 4 percent weekly gain.
(Additional reporting by Marius Zaharia, editing by Larry King)
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