Yen Set for Weekly Loss as Markets Rebound

Asian markets rallied on Friday, with Japan's Nikkei up 1.6%, nearly erasing Monday's 13% loss. The yen is poised to finish the week down 0.5% against the dollar after Monday's surge. European markets are expected to open stronger, with EUROSTOXX 50 and FTSE futures both up 0.3%.

Equities

The FTSE 100 slipped 0.3% on Thursday, with major players like AstraZeneca, BP, NatWest, and Standard Chartered trading ex-dividend, which pushed their shares down between 0.5% and 1.8%. Despite this, non-life insurers gained 1.6%, led by a 10% surge in Beazley, which upgraded its 2024 combined ratio forecast following a near doubling of its first-half pre-tax profit to $728.9 million.

TFI Fluid Systems also saw an 11% rise after strong half-yearly results, contributing to a 3.6% gain in the automobile and auto parts sector. Hikma Pharmaceuticals gained 8.3% after raising its annual group forecast, while Entain rose 5.1% after improving its annual net gaming revenue and earnings forecast.

In the US, the Nasdaq and S&P 500 both jumped more than 2% after jobless claims fell more than expected, easing concerns over the labour market. Technology and communication services led gains, while the Russell 2000 index climbed 2.4%. The Dow Jones Industrial Average rose 1.8%, the S&P 500 added 2.3%, and the Nasdaq Composite gained 2.9%.

Eli Lilly’s shares jumped 9.5% after the company raised its annual profit forecast, driven by strong sales of its weight-loss drug Zepbound, which exceeded $1 billion in a quarter for the first time. Under Armour’s shares surged 19.2% after the sports apparel maker posted a surprise first-quarter profit, helped by efforts to cut inventory and promotions.

Forex & Commodities

The US dollar strengthened on Thursday after US labour market data revealed a sharper-than-expected drop in jobless claims, easing fears of an imminent recession. The dollar’s rise was particularly notable against the yen, which fell 0.37% to 147.205. This follows a volatile week where the yen had initially surged due to speculation about changes in Japanese monetary policy. The dollar index, which tracks the greenback against six major currencies, climbed to a weekly high before settling at 103.21.

Gold prices edged down 0.2% to $2,420.88 per ounce, heading for their biggest weekly decline since June, as investors anticipated US interest rate cuts. Spot silver was down 0.1% to $27.54 per ounce, while platinum rose 0.6% to $936.40. Palladium gained 0.8% to $929.75, up over 4% for the week.

Oil prices also fell, with Brent crude down 0.66% to $76.30 a barrel and US West Texas Intermediate crude down 0.79% to $72.94. The drop in oil prices was limited by concerns over potential further Middle East tensions following recent events in Tehran, despite broader weakness across global equities.

Investors are now focusing on upcoming US consumer price index (CPI) and producer price index (PPI) data, as well as comments from Federal Reserve Chair Jerome Powell, which are expected to provide further insights into the Fed's policy direction.