Low while stocks jumped with U.S. equity-index
The yen plunged to a six-year low while stocks jumped with U.S. equity-index futures as the Bank of Japan unexpectedly increased its target for monetary stimulus. Gold fell as bonds from Italy to Portugal climbed.
Japan’s currency tumbled 2.5 percent to 111.96 per dollar by 9:03 a.m. in New York, the weakest since January 2008. The Stoxx Europe 600 Index added 1.5 percent, Japan’s Topix index jumped the most since June 2013 and Standard & Poor’s 500 Index futures signaled the gauge may rise to a record. Yields on 10-year notes in Italy, Spain, Portugal and Greece slid at least five basis points. The ruble weakened even after the central bank raised rates more than forecast. Gold slid as much as 2.6 percent to the lowest price since July 2010.
The BOJ boosted its annual target for enlarging the monetary base to 80 trillion yen ($724 billion) from 60 to 70 trillion yen, the central bank said. Adding impetus to the stock rally, Japan’s public pension fund, the world’s biggest, boosted its target for equity holdings today. S&P 500 futures (SPX) kept gains even after a report showed U.S. consumer spending unexpectedly dropped as incomes rose at the slowest pace of the year.
“If they wanted a big reaction in dollar-yen, they definitely succeeded,” said Niels Christensen, chief currency strategist at Nordea Bank AB in Copenhagen. “Very few were looking for new initiatives from the BOJ today, so that’s the reason we see a much a weaker yen, and also a strong increase in Japanese equities.”