Stocks surged on Friday following the announcement of Apple’s monumental $110 billion share repurchase initiative, which bolstered confidence in the tech sector. Concurrently, the yen saw a notable uptick, distancing itself from recent lows observed over the past 34 years, thus concluding a turbulent week marked by suspected interventions from Tokyo.
As trading in Japan and mainland China remained closed on Friday, regional market activity appeared subdued, with traders eagerly awaiting the release of US nonfarm payrolls data later in the day.
The broadest index of Asia-Pacific shares outside Japan, as measured by MSCI, saw a robust 1.5 percent increase, poised for a second consecutive week of growth. Meanwhile, Hong Kong’s Hang Seng Index surged by 2 percent, signaling a potential 5 percent gain for the week.
The yen exhibited a strengthening trend, rising by 0.55 percent to 152.80 per dollar in early Friday trading. This marked a significant reversal from the 34-year low of 160.245 per dollar recorded earlier in the week. Traders speculated on possible interventions by authorities throughout the week, with indications suggesting that Japanese officials may have expended approximately $60 billion in efforts to support the yen. Such actions kept trading desks globally vigilant for further moves from Tokyo.
Upcoming Japanese public holidays, coupled with Monday’s holiday in the UK, the world’s largest FX trading center, could offer a potential opportunity for additional intervention by Tokyo, especially considering the closure of Japanese markets on Monday.
The yen’s prolonged depreciation, attributed largely to persistently low Japanese interest rates, has led to capital outflows toward higher-yielding assets in other major economies like the United States. Despite a notable rebound this week, the yen remains down by 8 percent against the dollar for the year.
Chris Weston, head of research at Pepperstone, remarked that an additional $20 billion of yen purchasing on Friday could significantly deter yen shorts and potentially drive the dollar/yen exchange rate below 150.
The dollar index, which gauges the US currency against six major peers, hovered around 105.25. It is on track to register a 0.7 percent decline for the week, marking its weakest weekly performance since early March.
The Federal Reserve’s decision to leave rates unchanged this week and hint at future rate cuts was met with scrutiny, particularly in light of recent robust inflation figures. Jerome Powell, the Fed chair, acknowledged the possibility of delayed rate cuts due to strong inflation readings.
Susan Hill, senior portfolio manager at Federated Hermes, noted that while the threshold for reverting to a tightening bias is high, it is probable that the current Fed Funds target range of 5.25 percent to 5.50 percent will remain unchanged for the foreseeable future.
US stock markets closed higher on Thursday, with the Nasdaq, heavily weighted in technology stocks, surging by 1.5 percent, largely driven by gains in chip stocks. Apple’s quarterly results, which surpassed expectations, along with its announcement of a record share repurchase program during after-market hours, propelled its stock price by nearly 7 percent in extended trading.
Thursday’s economic data from the US showcased a tight labor market, setting the stage for the release of key government payrolls data on Friday. Economists polled by Reuters forecasted 243,000 new jobs, with estimates ranging from 150,000 to 280,000.
In the commodities market, US crude oil rose by 0.39 percent to $79.26 per barrel, while Brent crude stood at $83.98, up by 0.37 percent for the day.
Spot gold traded at $2,304.16 per ounce, poised for a second consecutive week of decline.
