Central Banks inaction falls short of investors expectations

US stocks dipped on Thursday after the Bank of Japan unexpectedly did not expand its monetary stimulus program and the Apple stocks dropped. The BoJ capped monetary stimulus in view of weak global demand in strengthening yen while markets expected it to go negative further. Later on Thursday the already looking down after weak earnings report Apple stocks dropped 3% to $ 94.87 as billionaire Carl Icahn said he closed his position in Apple stocks. US dollar index, a measure of a greenback’s value against a basket of six major currencies, has lost 4.7% since the start of the year while oil prices added 75% in three recent months. Dow Jones industrial average slid down 1.16% to 17,833.09, Nasdaq composite fell 1.19% to 4,805.29. S&P 500 index declined 0.92% to 2,075.93, the indices steepest daily decline in three weeks. Nine out of ten its major sectors closed lower with information technologies leading the decliners (-1.4%). Since february S&P 500 index rallied already 15% on rebounding oil prices and Fed’s course on monetary tightening (see S&p 500 historical prices). Speaking of top performers, St.Jude Medical stocks surged 25.5% to $77.29 on the news Abbott Laboratories agreed to acquire the company for $25bn. DreamWorks animation sky-rocketed 24% to $39.95 also on acquisition news. Amazon stocks added 13% on strong earnings report. The trading volume on the US exchanges was around 8.1bn shares which was above the 6.9bn average for the last 20 trading days.
Today at 13:30 CET the personal income and spending data for March will be released in the US, the outlook is neutral and positive. At 14:00 CET the Chicago purchasing manager index for April will come out, the tentative outlook is negative. At 15:00 CET the Michigan University confidence index will come out.
European stocks were looking down on Friday in their worst week this month with travel and leisure sector being the bottom performer. The STOXX Europe Travel and Leisure sector slumped 2%. IAG stocks dipped 4% on the news the group decided to limit its capacity expansion amid weaker demand. British Restaurant Group shares tumbled 23% on profit-warning. AS a result, the pan-European FTSEurofirst index lost 1.1%. The Germany’s Dax 30 index , French CAC40 and Britain’s FTSE 100 lost from 0.68% to 1.63% today. EURUSD edged higher as US dollar saw no support from the Fed this week. UK’s pound sterling rose to the 3-month high of $1.4658 on relieved Brexit concerns. Today in the morning the core consumer price index for April came out negative in the Eurozone while the seasonally adjusted advance GDP for April was above the expectations.
Yen added 3% on Thursday after the BoJ meeting where the bank unexpectedly introduced no stimulus measures. On Friday, the national holiday, the Japanese currency advanced further to the 18-month axis of 107.075 per US dollar showing the record weekly gain since 2008 and making exporters suffer. Nikkei index lost 5% this week. Chinese stocks were on the rise with CSI 300 index adding 0.3% and Shanghai Composite index adding 0.1%.
Oil futures prices rose on Friday on profit-taking with Brent crude down by 0.1% to $48.09 on Friday to close this week 6.6% higher and WTI prices flat at $46.03 to close the week 5.2% higher.
Gold reached its 7-week high on Friday with spot gold up 0.7% to $1,274.52 an ounce having touched $1,280.60. Gold futures for June rose $10.70 to $1,277.10 an ounce. Gold found support in Fed’s decision to leave the interest rates unchanged on Wednesday. Weak US corporate earnings and hawkish BoJ comments undermined the investors’ confidence and further supported the bullion.
Silver added on Friday 1.4% to $17.77 an ounce having added already 15% this April.