The U.S. dollar touched a two-decade high against rivals on Thursday,
as Wall Street rallied and European shares rose from six-week lows
with strong earnings reports offsetting gloomy U.S. economic data.
The yen dropped to a 20-year low after the Bank of Japan vowed to buy
unlimited amounts of 10-year bonds daily to defend its yield target.
The bank’s strengthening of its commitment to ultra-low interest rates
sent the U.S. dollar to a fresh high, weakened emerging market
currencies, and pushed borrowing costs for U.S. dollars in currency
derivatives markets sharply higher. read more
Oil prices settled higher on the increased likelihood that Germany
will join other European Union member states in an embargo on Russian
oil, which could further tighten supplies in the already-stressed
global crude market.
The S&P 500 (.SPX) climbed 2.47% to end the session at 4,287.50
points. The Nasdaq (.IXIC) gained 3.06% to 12,871.53 points, while Dow
Jones Industrial Average (.DJI) rose 1.85% to 33,916.39 points.
Technology stocks gained on strong earnings. Shares of Facebook parent
Meta Platforms Inc (FB.O) surged after the company reported a
larger-than-expected profit on Wednesday.
Apple Inc (AAPL.O), the world’s most valuable company, and e-commerce
giant Amazon.com Inc (AMZN.O) both rallied ahead of their quarterly
reports, though Amazon tumbled about 10% in extended trade after the
company forecasted current-quarter sales below estimates. read more
The tech sector gains supported Wall Street even after the U.S.
Commerce Department said in its advance GDP estimate that gross
domestic product fell at a 1.4% annualized rate last quarter. read
more
“Huge miss on GDP this morning, but just looking at headline is
misleading,” said Cliff Hodge, chief investment officer for
Cornerstone Wealth.
“Trade, inventories, and government spending all dragged, but the
consumer held up and business investment was strong. The shift to
services spending bodes well for inflation moving forward, and core
PCE came in a bit light. The big headline miss also gives the Fed some
breathing room.”
The MSCI world equity index (.MIWD00000PUS) rose 12.07 points, or
1.85%, to 665.97.
European stocks gained on solid corporate earnings. The pan-European
STOXX 600 (.STOXX) closed up 0.6% but was below session highs, hit by
weak advance first-quarter U.S. economic growth data as well as
higher-than-expected German inflation spurring bets on a quicker pace
of monetary tightening by the European Central Bank.
Indexes in Frankfurt (.GDAXI) and Paris (.FCHI) both rose.
London-listed bank Standard Chartered (STAN.L) jumped 14% after upbeat
quarterly earnings. Its Hong Kong-listed shares had earlier gained
more than 10%. read more
“Markets were quite fearful at the start of the earnings season but
Meta’s earnings last night seem to have calmed sentiment,” said Kaspar
Hense, senior portfolio manager at Bluebay Asset Management in London.
“It looks like we have turned a corner for the outlook for U.S. stocks
and that should provide some relief to investors watching the dollar’s
rise.”
MSCI’s broadest index of Asia-Pacific shares outside Japan
(.MIAPJ0000PUS) rose 1.03%.
The BoJ’s move was in stark contrast with investors’ conviction that
U.S. interest rates are about to start going up quickly and it jolted
the dollar higher.
“The message from the monetary policy statement this morning is that
the Bank of Japan refuses to budge, sticking with its unlimited
bond-buying plan to defend the 0.25% 10-year yield target,” said Arne
Petimezas, senior analyst at AFS Group.
The euro hit a five-year low against the dollar of $1.04695 before
paring losses. It was still on track for its worst monthly performance
since January 2015.
The euro’s drop to its lowest level since 2017 is rekindling the
possibility it will reach parity against the dollar for the first time
in two decades, as fears of a eurozone recession encourage investors
to pile on the bearish bets. read more
The weaker yen and euro pushed the dollar index to 103.930, its
highest level since December 2002.
Japan’s Nikkei (.N225) rose 1.75%, its best day in two weeks, as
investors cheered the weaker currency that helps Japanese exporters.
Benchmark 10-year Treasury yields rose to near their highest levels of
the year on Thursday after signs of strength in the U.S. job market
outweighed an unexpected decline in economic growth in the first
quarter.
A separate report from the Labor Department on Thursday showed initial
claims for state unemployment benefits fell 5,000 to a seasonally
adjusted 180,000 for the week ended April 23, suggesting that the U.S.
economy is putting the Omicron wave of the coronavirus behind it. read
more
Investors expect that U.S. rates are rising and that next week’s
Federal Reserve meeting will bring the first of several consecutive
50-basis-point hikes.
Brent crude futures rose $2.27 to settle at $107.59 a barrel while
U.S. West Texas Intermediate crude rose $3.34, or 3.3% to $105.36.
Germany hopes to find a way within days to replace Russian oil with
supplies from other sources, Economy Minister Robert Habeck said on
Tuesday, adding that Germany could then cope with an EU embargo on
Russian oil imports. read more
Germany is heavily reliant on Russian energy imports and had
previously opposed a full ban.
Spot gold prices were up 0.49% by 4:26 p.m. EDT (2026 GMT), rising
from a ten-week low touched earlier in the session under pressure from
the stronger U.S. dollar. U.S. gold futures settled up 0.1% at
$1,891.30.