Weak US GDP data knocked down the dollar and yields on US government debt yesterday, while Japanese government bond yields rose the most in eight years after investors coolly received the Bank of Japan’s latest effort to boost the economy.
The US economy grew far less than expected in the second quarter as inventory investment fell for the first time in nearly five years, though a surge in consumer spending suggested underlying strength and provided a silver lining for investors.
The BOJ doubled its purchases of exchange-traded funds, yielding to pressure from the government and financial markets for bolder action, but the move still disappointed investors who sought more audacious measures.
The yen jumped 2.39 per cent against the dollar, whose decline put the trade-weighted dollar exchange rate on course for its biggest weekly fall in two months.
Japan’s 10-year bond yield soared 10 basis points to -0.17 per cent, on course for its biggest one-day rise since April 2008.
World equity markets were mostly higher.
A surge in Alphabet and Amazon.com lifted the Nasdaq following strong results after the bell on Thursday and helped the benchmark S&P 500 to rebound. But disappointing results from oil super-heavyweights Exxon Mobil and Chevron weighed on the Dow.
The Dow Jones industrial average fell 14.41 points, or 0.08 per cent, to 18,441.94. The S&P 500 rose 3.42 points, or 0.16 per cent, to 2,173.48 and the Nasdaq Composite added 12.20 points, or 0.24 per cent, to 5,167.18.
Stocks in Japan absorbed the BOJ’s decision a little more easily, in part because the central bank increased the purchases of exchange-traded funds (ETFs) in its easing package. Japan’s Nikkei rose and European indices on better-than-expected results from Barclays and UBS, among others.
In Europe, the FTSEurofirst 300 index of pan-regional stocks closed a provisional 0.67 per cent at 1,347.23.
Yields on the benchmark U.S. Treasury note pushed below 1.5 per cent on the GDP data, with its price rising 10/32 and the yield falling to 1.4770 per cent.
Gold hit a near three-week high on the US GDP data, which is seen as keeping a Federal Reserve decision on when to raise interest rates on hold. US gold rose 0.6 per cent to $1,349.00 an ounce.