Global stocks nurse 9-month highs aims ECB meeting
World stocks hit near nine-month highs on Thursday as talk of another super-sized shot of stimulus from Japan helped buoy the mood ahead of the European Central Bank's first post-Brexit meeting. The yen had hit a six-week low on reports Tokyo was considering a package of at least 20 trillion yen to boost the economy. It later jumped 1 percent, however, after Bank of Japan chief Haruhiko Kuroda ruled out "helicopter money" which would effectively give cash directly to the population.
MSCI's 46-country All-World share index .MIWD00000PUS was at its highest level since early November as Europe's main bourses started the day broadly steady despite a tumble in airline stocks. Industry bellwethers easyJet and Lufthansa both warned of a worsening outlook, with the German firm dropping over 6 percent after saying bookings had been hit hard by "terrorist attacks in Europe and greater political and economic uncertainty". ECB policymakers meeting in Frankfurt must consider a list of concerns including the impact of Britain's vote to leave the European Union, a potential Italian banking crisis and suggestions the ECB is running out of policy ammunition.
The euro was touch higher at $1.1025 EUR= having fallen for 10 of the last 14 weeks, while German DE10YT=TWEB and other core euro zone government bond yields nudged up to their highest levels of the month so far. "We are not expecting anything in terms of action from the ECB today because Draghi and his colleagues won't have had enough data to see an impact of the UK EU referendum vote," said Vasileios Gkionakis, head of FX strategy at UniCredit in London. "We think a some point between September to December we will get another extension of the QE programme in terms of timeframe, but we don't think they will go down the line of another deposit rate cut."
Turkish assets struggled again after President Tayyip Erdogan declared a state of emergency on Wednesday, widening a crackdown against thousands of members of the security forces, judiciary, civil service and academia after Friday's failed military coup.
Istanbul's main stock market slumped 3.3 percent .XU100 in a fourth day of falls, although the lira TRY= managed to claw back 0.25 percent after plunging below the big figure of 3 to the dollar.
Turkey apart, emerging markets are enjoying a hot streak. Inflows to EM assets hit their highest level in nearly three years last week, according to the latest survey by the Institute of International Finance.
Futures prices ESc1 pointed to a steady start for record high Wall Street markets .SPX.DJI when they resume later. Overnight, MSCI's broadest index of Asia- Pacific shares outside Japan .MIAPJ0000PUS had risen to its highest level since October 2015, taking gains over the last month past 10 percent in the process. Japan's Nikkei stock index N225 outperformed as it rose 1 percent on reports that the government is to compile a stimulus package of at least 20 trillion yen to help the economy. "What the market wants now is both fiscal and monetary policy and such expectations are getting higher," said Hikaru Sato, a senior technical analyst at Daiwa Securities.
The dollar rose 0.2 percent to 107 yen JPY= after climbing as high as 107.460 earlier, its highest since June 7 and returning to levels seen before markets were roiled by Britain's vote last month to exit the European Union. The dollar index, which tracks the greenback against a basket of six main world currencies, dipped in Europe to 96.884 DXY having touched its highest level since early March on Wednesday.
In commodity markets, oil was beginning to backslide. Brent crude LCOc1 nudged back towards $47 a barrel having been as high as $47.35 in Asia, while U.S. crude CLc1 was flat at $45.73 a barrel. That gave a boost to safe-haven gold XAU=, which edged up 0.3 percent to $1,320 an ounce after plumbing three-week lows on Wednesday. "With gold looking increasingly shaky on the charts, all eyes will turn to the ECB policy meeting," said INTL FCStone analyst Edward Meir.