|
 Japan's Nikkei fell 5.4 percent, having been shut during Thursday's
global rout, so there was relief as the dollar and the yen steadied
and London and Europe's other main stock markets rose almost 2
percent.
The dollar was gradually clawing back some of the 4 percent it has
lost to the yen this week, settling currency markets.
Oil prices climbed off 12-year lows [O/R] too and safe-haven gold,
on for its best week in four years, and U.S. and German government
bonds all cooled after their sizzling last few days.
"All the market has been shattered," said ABN Amro chief investment
officer Didier Duret.
"It has been driven by a lot of speculation. The strength of the yen
has created discomfort too, but this is short-term," he added,
saying the Bank of Japan could intervene in FX markets and that data
in coming weeks should ease global recession worries.
The first reading of Q4 2015 euro zone and German GDP figures came
in solidly, both with 0.3 percent growth quarter-on-quarter. But
that was offset slightly by disappointing equivalent figures from
Italy and a fall in industrial output.
Investors have been fleeing stocks and running to safe havens like
bonds and gold, spooked by the direction of the world economy.
Only six weeks ago cheap oil was still expected to cushion the
outlook for growth, but tumbling energy prices are upending the
economies of oil-producing countries.
Increasingly too, investors are nervous about radical central bank
policies like negative interest rates, which some fear could be
doing irreparable damage to the banks by crushing profitability.
Bank stocks in Europe, where negative interest rates are most
prevalent and are expected to go lower still, have been routed again
this week and fallen almost 30 percent since the start of the year.
"I do not expect a collapse or major financial crisis like the
Lehman crisis but it will take some time before market sentiment
will improve," said Tsuyoshi Shimizu, chief strategist at Mizuho
Asset Management.
WEAK WEEK
Despite the rise in European stocks, the overnight drop in Asia
meant MSCI's 46-country All World index was down for a sixth
straight session and roughly 4 percent for the week.
The hardest hit has been Japan's Nikkei which fell 5.4 percent to a
15-month low on Friday and posted a weekly loss of 11.1 percent, its
biggest since October 2008, as this week's sudden spike in the yen
took most investors by surprise.
[to top of second column] |
That surge in the yen has come as traders have all but canceled bets
that the Federal Reserve will raise U.S. interest rates again this
year, which in turn has seen the dollar nose-dive and rattled
markets generally.
Longer-term U.S. debt yields kicked up to 1.68 percent in European
trading having been as low as 1.53 percent on Thursday, as investors
locked in some of the huge gains of recent weeks. They started the
year at 2.3 percent.
Fed fund futures are pricing in the shallowest of shallow tightening
paths. The market implies a rate of 45 basis points for the end of
this year, 60 basis points at the end of 2017 and 90 by the close of
2018.
In Europe, German Bunds also saw profit-taking, though Portuguese
bonds remained in the firing line having suffered their worst
selloff in 2-1/2 years on Thursday on worries its new government may
not be sticking to its bailout program.
Portuguese yields were up another 3.2 basis points at 4.26 percent
and on track to post their biggest weekly jump since May 2012, the
height of its debt crisis.
"We have a new government and its fiscal policy is in doubt in the
market," said Jan von Gerich, fixed income chief analyst at Nordea.
"As long as the ECB is there to support Portugal, that limits the
losses but if there is serious fiscal slippage and Portugal losses
its final investment grade rating, forcing the ECB to drop them from
the QE program, the losses could be huge."
Things were calmer for commodities. Brent and U.S. oil prices
were both up roughly 5 percent from Thursday's near 13-year low,
helped by comments from an OPEC energy minister sparking hopes of a
coordinated production cut.
Gold dipped to $1,237.36 after soaring 4 percent the previous day
and was still set for its best week in four years after the stock
and FX market turmoil had sent investors into safe haven assets.
(Reporting by Marc Jones; editing by Andrew Roche)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
