By Wayne Cole and Lucy Raitano
LONDON/SYDNEY, May 1 (Reuters) – Global shares steadied on Friday, with attention firmly on currency markets after the yen suddenly jumped against the dollar in early European trading, a day after Tokyo authorities were widely believed to have intervened to prop up the Japanese currency.
The greenback tumbled as much as 1% against the yen in a matter of minutes on Friday before moderating; it was last down 0.1% on the day at 156.45.
“The move is clearly – thus far anyway – a lot more modest than the moves that we saw in dollar-yen yesterday,” said Mike Brown, senior research analyst at Pepperstone.
Japanese authorities stepped into the markets to haul the currency back from near two-year lows on Thursday.
Meanwhile, U.S. futures edged higher, while most major European markets were closed for holidays. Market watchers are digesting this week’s upbeat earnings at major tech firms which drove Wall Street to fresh record highs on Thursday.
Apple rose in pre-market trading on Friday after reporting Q3 sales growth above estimates, hot on the heels of some positive big tech earnings earlier this week.
Global shares clocked their biggest monthly rise since 2020 in April, buoyed by earnings optimism even as oil flows remain disrupted through the vital Strait of Hormuz.
Iran on Thursday said it would respond with “long and painful strikes” on U.S. positions if Washington renewed attacks and restated its claim to the strait.
Brent crude firmed 0.7% to $111.20 a barrel.
JAPAN DRAWS A LINE FOR YEN
Most of the day’s focus will likely be on currency markets as the Japanese yen was poised for its strongest weekly rally since early February, while investors remained on high alert for further action from Japan’s Ministry of Finance.
“The cost is likely to be in the tens of billions of dollars based on history,” said Tim Baker, a macro strategist at Deutsche Bank, referring to the size of Thursday’s intervention.
“We’re not convinced USD/JPY will keep falling or even stay here for long,” he argued. “The cross may well be high relative to rates, but it’s actually low relative to a simple model that includes rates, equities and oil.”
Moves in major currency pairs were muted. The euro was last flat at $1.1736 and away from a three-week trough of $1.1655. The pound was unchanged at a 10-week high at $1.36035.
It has been a central-bank-heavy week after the Bank of England, European Central Bank and the Federal Reserve all kept rates on hold even as spiking energy prices stoked inflation fears.
European Central Bank President Christine Lagarde said board members were debating whether to lift rates and noted that data over the next six weeks would decide the issue.
“The messages conveyed during the press conference leave us with a distinct perception that the consensus among governors is that they will hike policy rates at the next meeting on June 11,” analysts at Citi said in a note.
“We find no reason to alter our expectation of back-to-back rate hikes in June and July.”
That followed a hawkish shift from the Federal Reserve on Wednesday that saw markets give up on any hope for a rate cut there this year.
The pivot left U.S. 10-year Treasury yields up 8 basis points on the week at 4.390%, but off a top of 4.436%.
(Reporting by Wayne Cole; Editing by Shri Navaratnam, Sam Holmes and Thomas Derpinghaus)
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