Stocks edge higher, dollar dips with potential yen intervention in focus
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NEW YORK/LONDON Jan 23 : MSCI's global equities index was rising modestly on Friday and benchmark U.S. Treasury yields edged down while the yen gained against the dollar as traders bet that Japanese authorities are close to intervening directly to support the currency.
The yen suddenly swung from a loss to a gain versus the dollar, suggesting to traders that Japan may have run rate checks with banks - often a signal of readiness to intervene.
Earlier in the day the Bank of Japan signaled its readiness to continue raising still-low borrowing costs in a politically-charged atmosphere, ahead of a snap election next month.
After two days of gains, Wall Street equities were making little progress, suggesting a muted ending for a week punctuated by a sell-off then a relief rally linked to U.S. President Donald Trump's withdrawal of tariff threats and ruling out seizing Greenland by force.
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With a busy week ahead, including a Federal Reserve meeting, key economic releases and earnings reports, Gene Goldman, Chief Investment Officer at Cetera Investment Management in El Segundo, California said that investors were taking a breath and "in a wait-and-see approach."
"There's really no big drivers today and markets really benefited the last couple of days from easing geopolitical risks," he said. "Stocks are taking a breather because of anticipation of a really big week."
Fed funds futures are pricing an implied 97 per cent probability that the U.S. Federal Reserve will hold rates steady next week, according to the CME Group's FedWatch tool.
With disappointing forecasts weighing on Intel shares after its quarterly update late on Thursday, investors were waiting for reports from Microsoft, Meta Platforms and industrial giant Caterpillar among others in the week ahead.
While global stocks have clawed back much of the ground lost in Tuesday's sell-off, investors are still waiting for details of a deal being negotiated between the U.S. and European leaders regarding Greenland. As a result some big Northern European investors are increasingly wary of the risks of holding U.S. assets.
Investors are also watching for any signs of progress from U.S.-brokered trilateral talks over Ukraine, with its President, Volodymyr Zelenskiy saying on Friday that the vital question of territory in Ukraine's war with Russia would be discussed in Abu Dhabi on Friday and Saturday.
On Wall Street at 11:33 a.m. (1633 GMT), the Dow Jones Industrial Average <.DJI> fell 286.46 points, or 0.57 per cent, to 49,100.07, the S&P 500 <.SPX> rose 5.37 points, or 0.08 per cent, to 6,918.72 and the Nasdaq Composite <.IXIC> rose 99.59 points, or 0.43 per cent, to 23,535.61.
MSCI's gauge of stocks across the globe <.MIWD00000PUS> rose 1.93 points, or 0.19 per cent, to 1,037.96.
The pan-European STOXX 600 <.STOXX> index fell 0.21 per cent.
In currencies, the yen was volatile with a sudden spike earlier on speculation of a potential intervention, while the dollar edged lower and was set for its steepest weekly decline since June.
The dollar index <=USD>, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.25 per cent to 98.06.
With the euro up 0.1 per cent at $1.1766, the dollar weakened 0.47 per cent against the Japanese yen to 157.65. Sterling strengthened 0.59 per cent to $1.3577.
Japanese Finance Minister Satsuki Katayama said on Friday she was watching currency markets closely, but declined to comment on the speculation.
In Treasuries, the yield on benchmark U.S. 10-year notes fell 0.6 basis points to 4.245 per cent, down from 4.251 per cent late on Thursday, while the 30-year bond yield fell 0.6 basis points to 4.8427 per cent.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 1.2 basis points to 3.603 per cent, from 3.614 per cent late on Thursday.
In energy markets, oil prices rebounded after Trump renewed threats against Iran, raising concerns of military action that could disrupt crude supplies while there are outages in Kazakhstan.
U.S. crude rose 2.81 per cent to $61.03 a barrel and Brent rose to $65.82 per barrel, up 2.75 per cent on the day.
In precious metals markets, silver and gold set new records with silver prices rising above $100 an ounce for the first time and gold hitting another record and en-route to $5,000/oz as investors continued to pile into safe haven assets amid geopolitical turmoil.
Spot gold rose 0.94 per cent to $4,983.11 an ounce. U.S. gold futures rose 0.55 per cent to $4,936.00 an ounce.
Elsewhere in metals, copper rose 3.08 per cent to $13,148.50 a tonne. Three-month aluminum on the London Metal Exchange rose 1.1 per cent to $3,167.50 a tonne.
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