Global shares and bonds fell on Friday as the Bank of Japan's rate hike failed to support the yen, capping a week in which central banks across the G10 turned sharply hawkish on inflation. Oil retreated from recent highs but gave stocks and bonds only modest relief, while tech shares helped lift US futures.
Global shares and bonds dropped on Friday even after the Bank of Japan raised rates to a 31-year high of 1.25%, as markets closed out a turbulent week defined by a global push by central banks to quell inflation. The war in the Middle East is nearing its seven-month mark, keeping oil above $100 a barrel and fanning price pressures.
BOJ hike fails to lift the yen
The BOJ's decision, though expected, left two board members dissenting, and the dollar still climbed 1.2% to 157.82 yen, its biggest daily slide since mid-February.
BOJ Governor Kazuo Ueda said underlying inflation is approaching 2% and that the bank's policy focus has shifted, though most board members still see policy as accommodative even after Friday's hike. But the Federal Reserve raised rates on Wednesday for the first time in three years and adopted a more aggressive stance, and that put the yen on course for its worst weekly performance against the dollar in two years, down 2.6%.
Hawks circle across the G10
The BOJ meeting closed out a run of major central-bank decisions this week, and September has brought the biggest rise in average interest rates across the G10 since July 2023, with four central banks raising rates and others signaling they may follow. The Bank of England left UK rates unchanged on Thursday but said it may need to hike if the Iran war drags on, while the European Central Bank flagged further tightening last week. Australia's top central banker said on Friday that some of the upside inflation risks policymakers had flagged appeared to be materializing.
Oil retreat gives markets only modest relief
Brent crude fell as much as 2.8% to $101.92 after a Reuters report that China asked Tehran to help rein in the Houthis, putting the contract on course for a 2% weekly drop even as physical prices held near $120.
The retreat gave stocks and bonds little respite: European shares fell 0.5% on the day, while US stock futures rose 0.2% to 0.5%, led by tech shares. Bond prices edged up as volatility eased after this week's selloff pushed the 10-year US Treasury yield beyond 5% to its highest since 2007, last at 4.96%, with euro zone and UK yields also touching multi-year highs.
Source: Investing.com
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