Macro Roundup (Dec 22)

SHANGHAI, Dec 22 —This is a roundup of global macroeconomic news last night and what is expected today.

The yen fell in a choppy session on Wednesday, ceding some of the ground gained the previous day when a surprise policy tweak by the Bank of Japan lifted the Japanese currency by 4% against the dollar.

The BOJ decided to change its “yield curve control” policy on Tuesday even as it kept broad policy settings unchanged. It is letting 10-year yields move 50 basis points either side of its 0% target, wider than the previous 25-basis-point band.

On Wednesday, the dollar was 0.4% higher against the yen, having plunged 3.8% in the previous session, its largest one-day drop against the Japanese currency in 24 years.

The story of 2022 has been the strength of the dollar, which has surged as the U.S. Federal Reserve hiked interest rates at a rapid clip, and as rising geopolitical tensions left investors seeking shelter in less risky currencies.

Stock futures rose slightly in overnight trading on Wednesday after better-than-feared earnings and strong consumer confidence data helped boost stocks for a second day.

Stock futures tied to the Dow Jones Industrial Averages gained 38 points or 0.1%, while S&P 500 futures added 0.15%. Nasdaq 100 futures inched 0.12% higher.

The overnight moves followed another positive session for stocks. During regular trading Wednesday, the Dow gained 526.74 points, while the S&P 500 and Nasdaq Composite surged 1.49% and 1.54%, respectively.

All 11 S&P 500 sectors finished the day with gains, led to the upside by energy. Nike and FedEx shares rose on quarterly results, giving some investors hope that earnings are faring decently despite concerns of a downturn. Strong consumer sentiment data for December also gave markets a lift.

Oil prices rose by more than $2 a barrel on Wednesday after data showed a larger-than-expected draw in U.S. crude stockpiles, but gains were capped by a snowstorm that is expected to hit U.S. travel.

Brent crude futures for February delivery were up by $2.21, or 2.76%, at $82.20 a barrel, while U.S. West Texas Intermediate (WTI) crude futures gained $2.06, or 2.7%, to $78.29.

U.S. crude inventories fell by 5.89 million barrels, according to data from the U.S. Energy Information Administration (EIA), compared with estimates for a drop of 1.66 million barrels. Data from the American Petroleum Institute on Tuesday showed a 3.1 million barrel draw in the week to Dec. 16, market sources said.

Gold prices were unchanged on Wednesday, holding above the key $1,800 level, as expectations of slower U.S. rate hikes lent support, but a rise in the dollar capped any further gains in the non-yielding bullion.

Spot gold was steady at $1,817.95 per ounce after rising more than 1% on Tuesday on the back of a dip in the dollar. U.S. gold futures remained unchanged from the previous session at $1,825.40.

European markets were in positive territory on Wednesday, as they shook off some of the losses from recent sessions.

The Stoxx index provisionally closed 1.7% higher, and all sectors and major bourses were in the green. Retail led gains, climbing 2.8%, followed by financial services, up 2.5%, and mining stocks, up 2.2%.