Macro Roundup (Apr 29)

SHANGHAI, Apr 29 —This is a roundup of global macroeconomic news last night and what is expected today.

The dollar index hit its highest level since 2002 on Thursday as the dollar shot to two-decade highs on the yen after the Bank of Japan (BOJ) doubled-down on its super-low yield policy by offering to buy endless amounts of bonds every session as needed.

That saw the U.S. currency vault 2.16% to 131.2 yen, levels not seen since 2002. It also brought the dollar’s gains for April to more than 6%, while the dollar index rose to 103.85.

There had been some market speculation the BOJ might step back a little given inflation was rising and other major central banks were tightening, but it showed no hesitation.

The uber-dovish decision set it far apart from the Federal Reserve, where markets are priced for 150 basis points (bps) of hikes in just three meetings, and triggered a fresh rush of funds into the dollar ahead of all else.

Nasdaq 100 futures fell Thursday evening following an extravaganza of Big Tech earnings, with disappointments from Amazon and Apple.

Futures tied to the tech-heavy index fell 1.5%, while Dow Jones Industrial Average Futures slid 0.4% and S&P 500 futures retreated by 0.8%.

The moves are a big reversal for stocks, which posted big gains in regular trading. The Dow rose 614 points, or 1.9%, and the S&P 500 advanced 2.5%. The tech-heavy Nasdaq Composite jumped 3.1%.

Oil prices rallied on Thursday after reports that Germany is no longer opposed to an embargo on Russian oil, which could further tighten supplies in the already stressed global crude market.

German representatives to the European Union are no longer objecting a full Russian oil embargo as long as Berlin is given time to secure alternative supplies, the Wall Street Journal reported on Thursday.

The article echoes comments from Germany’s Economy Minister Robert Habeck on Tuesday, when he said the EU’s largest economy, could cope with an EU embargo on Russian oil imports and it was hoping to find ways to replace Russian oil with other supply.

Brent crude futures rose 2.2% to $107.59 per barrel. U.S. West Texas Intermediate crude settled 3.3% higher at $105.36 per barrel.

Gold prices reached a 10-week low on Thursday, as an elevated U.S. dollar hurt demand for greenback-priced bullion, while an impending Federal Reserve interest rate hike also dented the metal’s appeal as an inflation hedge.

Spot gold traded as low as $1,877.18 per ounce, lowest since Feb. 16. The metal later rebounded to trade up about 0.5% to $1,895.43. U.S. gold futures eked out a small gain to trade at $1,896.7

Gold has been holding very well above $1,900, but has seen pressure from the dollar, and the underlying factor of the U.S. Federal Reserve being expected to raise interest rates by 50 basis points next week, said Brian Lan, managing director at dealer GoldSilver Central.

European stocks closed higher Thursday as investors reacted to a slew of earnings and continued to monitor developments in Ukraine, and Russia’s next move on its gas supplies to Europe.

The pan-European Stoxx 600 closed higher by 0.4%, with autos, travel and tech stocks leading gains as most sectors and major bourses finished in positive territory. Basic resources bucked the upward trend to shed 1.6%.

There has been a mixed trade this week with fears persisting over Ukraine and energy supplies to the region following Russia’s decision to halt gas flows to Poland and