Yen Swings Sharply Amid Suspected BOJ Intervention

The yen saw significant volatility, with suspected Bank of Japan intervention causing sharp movements, particularly after US inflation data indicated cooling consumer prices. Traders remain cautious as the yen surged over 2% on Thursday, amid speculation of Tokyo's strategic timing.

Equities

The FTSE 100 rose by 0.4% for the second consecutive session, with the mid-cap FTSE 250 climbing 1.3% to breach the 21,000 mark for the first time in over two years. Utility shares drove these gains, with Pennon leading the sector, surging 9.7% after appointing Laura Flowerdew as its new CFO. The utilities sector index increased by 2.1% following Ofwat's directive for water companies to improve infrastructure without significantly raising bills.

In contrast, Bytes Technology saw a significant drop of 6.1%, landing at the bottom of the mid-cap index, due to weaker profit growth. Meanwhile, the UK's GDP growth of 0.4% in May bolstered investor confidence, although it likely diminished the chances of an August rate cut by the Bank of England.

On Wall Street, the Nasdaq fell sharply by 1.95%, impacted by losses in major tech companies such as Nvidia, Apple, and Tesla. Tesla plummeted 8.4%, marking its largest single-day percentage drop since January, following news from Bloomberg about a delay in the launch of its robotaxi. Apple dropped 2.3% after hitting a record high on Wednesday, despite BofA Global Markets raising its price target, citing strong iPhone sales driven by new AI features. Microsoft and Amazon each fell over 2%, while Meta Platforms dropped about 4%.

The S&P 500 declined by 0.88%, ending at 5,584.54 points, while the Dow Jones Industrial Average saw a modest rise of 0.08%, closing at 39,753.75 points. This drop ended a seven-day streak of record high closes for the Nasdaq and a six-day streak for the S&P 500. The S&P 500 Real Estate index rose by 2.7%, trimming its year-to-date losses to 1%.

Delta Air Lines slumped 4% after forecasting lower-than-expected profits for the current quarter, causing a broader decline in airline stocks. The S&P 500 passenger airline index dropped by 2.7%.

Citigroup slipped 1.9% after being fined $136 million by US bank regulators. Conagra Brands fell 1.5% following its forecast of annual revenue and profit below estimates. Despite these declines, advancing issues outnumbered falling ones within the S&P 500 by a 3.7-to-one ratio. The S&P 500 posted 51 new highs and 2 new lows, while the Nasdaq recorded 141 new highs and 50 new lows.

Forex & Commodities

The dollar fell on Thursday after data showed a surprising decline in US consumer prices for June, fuelling expectations of a rate cut by the Federal Reserve in September. This led to a surge in the Japanese yen, which rose more than 2%, sparking speculation about possible intervention by Japanese officials. The yen had hit a 38-year low against the dollar the previous week. The dollar index fell 0.49% to 104.45, reaching its lowest since June 7, while the euro rose 0.34% to $1.0867.

Sterling hit an almost one-year high, buoyed by comments from Bank of England policymakers and better-than-expected GDP data showing a 0.4% increase in May. This reduced the likelihood of an August rate cut in Britain. The pound was up 0.51% at $1.2911, reaching its highest since July 2023.

Gold prices surged, with spot gold rising 1.82% to $2,414.27 an ounce, bolstered by the prospect of rate cuts. US gold futures also gained 1.77%, reaching $2,414.10 an ounce.

In the oil market, Brent crude futures rose 0.4% to settle at $85.40 a barrel, while US West Texas Intermediate crude futures increased by 0.6% to $82.62 a barrel.