Shares rise, dollar drops vs yen after BOJ hint of exit from negative
rates
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[September 11, 2023] By
Amanda Cooper
LONDON (Reuters) -Global shares edged up on Monday thanks in part to a
burst of risk appetite, with the yen jumping by the most against the
dollar in two months after the head of the Bank of Japan hinted at an
eventual shift away from negative interest rates.
Signs of stabilization in the Chinese economy pushed up the price of
copper and underpinned the oil price above the crucial $90-a-barrel
level.
The yen surged after BOJ Governor Kazuo Ueda said the central bank could
end its policy of negative interest rates when the achievement of its 2%
inflation target is in sight.
The dollar dropped by as much as 1.3% to 145.91 yen but is still within
sight of last week's high of 147.87 - a level at which traders were
preparing for the BOJ to possibly intervene outright in the markets to
prop up the currency.
The dollar has benefited in recent weeks from a growing sense of caution
among investors towards China and Europe, both showing worrying signs of
slowdown in contrast with the U.S. economy, which many believe is
heading for a soft landing.
Global shares, as reflected by the MSCI All-World index, rose 0.2%,
supported by a bounce in stocks in Europe, where the STOXX 600 gained
0.5%. Last week, the STOXX posted its longest stretch of losses in 5-1/2
years.
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This week holds a number of major risk events, such as the European
Central Bank policy meeting and a key reading of U.S. monthly inflation,
which will likely temper a broader rally, according to City Index
strategist Fiona Cincotta.
"After such a heavy sell-off last week, there is a bit of a recovery, or
a pause in the sell-off, now, and given that it's such a big week as far
as the ECB is concerned and as far as inflation is concerned, investors
are in a cautious mood, which is going to prevent stocks from going too
much higher," she said.
INFLATION IN SIGHT
U.S. inflation data is due on Wednesday. Economists polled by Reuters
expect consumer prices to have risen by 3.6% from last year, up from
July's 3.2% reading.
The core rate, which excludes food and energy prices and is more of a
focus for the Fed, is expected to have slowed to an annual rate of 4.3%
from 4.7% in July.
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![](../images/091123PIX/busine59.jpg)
A man walks past an electronic board showing Japan's Nikkei average
and stock prices outside a brokerage, in Tokyo, Japan, March 17,
2023. REUTERS/Androniki Christodoulou/File Photo
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Investors are pricing in a 93% probability the Fed will leave rates
unchanged when it convenes next week, but the outcome of the
November meeting is less clear - money markets show the split is
50/50 as to whether there is another hike or not.
The yield on the benchmark 10-year Treasury note rose 3 basis points
to 4.282%, while that on the two-year note was flat at 4.98%.
U.S. stock futures were up between 0.3-0.5%.
On the markets in Asia, Chinese blue-chip stocks ended the day up
0.7% after data showed deflation pressures were easing, which
suggested the economy might be returning to a more stable footing.
A separate report showed new lending almost quadrupled in August, a
sign of the central bank's efforts to shore up growth.
"In the near term investors are cautious towards China but we are
quite encouraged that the policies have turned from more piecemeal
to more targeted in the past few weeks, especially with property,"
said Marcella Chow, JPMorgan Asset Management market strategist.
Copper futures rose 1.5% on Monday to $8,367 a tonne, while Brent
crude futures dipped 0.35% on the day but held above $90 a barrel,
near the year's highs.
![](http://archives.lincolndailynews.com/2023/Sep/11/images/ads/current/siu_sda_090723.png)
The euro was up 0.3% on the day at $1.0709, having lost 1.09% in a
month as expectations have faded for the ECB to raise rates again
this year in light of a sharp slowdown in business activity.
The ECB meets on Thursday to set interest rates and markets have all
but priced out any chance of a hike.
(Additional reporting by Scott Murdoch in Sydney; editing by Edwina
Gibbs, Simon Cameron-Moore and Mark Heinrich)
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