By Chris Prentice and Naomi Rovnick
NEW YORK/LONDON (Reuters) -Global stock prices were higher on Friday as Big Tech gains lifted Wall Street shares, while the Japanese yen fell to a 34-year low after the Bank of Japan (BOJ) cut monetary policy kept it flexible.
MSCI’s global stock index rose 6.80 points, or 0.90%, to 762.39 on optimism in the technology sector following robust results from Alphabet (NASDAQ:) and Microsoft (NASDAQ:).
US data also boosted sentiment, with the consumer expenditure price index (PCE) rising 0.3% in March, in line with estimates from economists polled by Reuters. In the 12 months to March, PCE inflation rose 2.7%, versus expectations of 2.6%.
The Nasdaq and Nasdaq posted their biggest weekly percentage gains since early November 2023.
The S&P 500 rose 153.86 points, or 0.40%, to 38,239.66, the S&P 500 gained 51.54 points, or 1.02%, to 5,099.96 and gained 316.14 points, or 2, 03%, to 15,927.90.
Europe’s benchmark stock index posted its biggest daily gain in more than three months, up 1.2%, following gains in banking and industrial stocks. The technology sector received a boost from the positive results of US megacaps.
The dollar reached 158,275 yen, the highest level since June 1990.
World stocks were poised to end the month lower as hopes for quick Fed rate cuts faded following a series of US inflation data.
The Bank of Japan kept interest rates near zero at its policy meeting, despite forecasting inflation of around 2% for three years.
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Markets are primed for Tokyo authorities to support the currency, which would be an unconventional and politically difficult decision. BOJ Governor Kazuo Ueda said on Friday that exchange rate volatility could have a significant impact on the economy.
US Treasury Secretary Janet Yellen told Reuters on Thursday that currency intervention was acceptable only in “rare” circumstances and that market forces should determine exchange rates.
Yellen also said US economic growth was likely stronger than suggested by weaker-than-expected first-quarter manufacturing data.
“The lack of inflation returning to 2% in the first quarter is still disappointing,” Bill Adams, chief economist at Comerica (NYSE:) Bank in Dallas, said in a market note.
“When the Fed meets next week, they will almost certainly say that the first quarter economic data does not reach the high bar needed to start cutting rates.”
The yen was trading about 40% below its fair value, said Luca Paolini, chief strategist at Pictet Asset Management.
“We underestimate the chance of something going very wrong if you have a currency that is completely out of line with the (economic) fundamentals,” he said.
“The sooner they raise rates, the better.”
REVENUES ARE FALLING
Longer-term U.S. Treasury yields fell after data showed inflation rose in March, in line with economists’ expectations.
The yield on U.S. 10-year benchmark bonds fell 4.3 basis points to 4.663%, down from 4.706% late Thursday. Bond yields rise as prices fall.
The yield, which usually keeps pace with interest rate expectations, fell by 0.5 basis points from 4.998% to 4.9934%.
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Traders now expect the Fed to cut its key interest rate, currently at a 23-year high of 5.25% to 5.5%, by just 36 basis points this year, with some fearing a further increase.
Eurozone government bond yields fell as market expectations for cumulative European Central Bank rate cuts this year fell well below 75 basis points on strong US economic data.[GVD/EUR]
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.75% higher at 535.58, while rising 306.28 points, or 0.81%, to 37,934.76.
added 0.21% to $2,336.79 an ounce. The US settled 0.2% higher at $2,347.20.
futures rose 49 cents, or 0.55%, to $89.50 a barrel. U.S. West Texas Intermediate crude futures rose 28 cents, or 0.34%, to $83.85 a barrel.
