(Bloomberg) -- Asian equities jumped on Thursday following the strongest day for US stocks since early August after the Bank of England unveiled a bond-buying program that triggered a global rally in government debt.
Equities rose in Japan and Australia and futures for Hong Kong climbed. The S&P 500 advanced 2% to snap a six-day losing streak, helped along by a surge in Amazon.com Inc. shares after the company unveiled a push further into wellness, security and the auto industry.
The rally in risk assets was triggered by the BOE’s plan to purchase up to £65 billion ($71 billion) in UK government debt over the next two weeks. The move averted a crisis for retirement funds and has lifted risk sentiment in Asia’s markets Thursday.
The region’s financial authorities have been on high alert in recent weeks, with China, Japan and South Korea among nations taking action in markets to prevent a downward spiral.
Read more: Plunging Markets Spur New Intervention Warnings Across Asia
The BOE’s bond buying buoyed the pound, which recently fell to the lowest since 1985. It was weakening again Thursday morning in Asian trading as the dollar rose slightly against its Group-of-10 counterparts
“The central bank is in a very difficult position right now,” Julie Biel, Kayne Anderson Rudnick portfolio manager and senior research analyst, said of the BOE in an interview with Bloomberg TV. “Everyone has been a little bit backed into a corner in seeing the volatility and market reaction.”
Read more: UK Government Hopes to Rebuild Credibility After BOE Bailout
In recent moves, China’s central bank issued a warning to speculators targeting the yuan, South Korea unveiled a bond buying program and Taiwan mulled currency controls.
Treasuries rallied Wednesday while a Bloomberg dollar index fell by the biggest margin since the early weeks of the pandemic. Treasuries were little changed Thursday.
Federal Reserve officials continued to hammer home the central bank’s hawkish outlook. The Fed’s Atlanta President Raphael Bostic said he backs raising rates by a further 1.25 percentage points by the end of this year to counter inflation that has been worse than he expected.
“All eyes are on inflation and interest rates,” said Josh Emanuel, chief investment officer of investment management at Wilshire. “Equities are really going to take their cues from bond market. So if you see bond yields move lower, that is a good sign for equities.”
European Union officials unveiled fresh economic limits on Russia in response to further annexing of Ukraine. The new round of sanctions would bar sales of Russian oil by third party countries beyond a set price cap. The plan would inflict around $6.7 billion in economic pain on Russia.
“The markets are very pessimistic. Investors are fairly on the sidelines,” said Julia Raiskin, Asia-Pacific head of markets for Citigroup Inc. “Other than the dollar, there are not many assets that are trading constructively.”
How much damage is a strong dollar causing? That’s the theme of this week’s MLIV Pulse survey. It’s brief and we don’t collect your name or any contact information. Please click here to share your views.
Key events this week:
Euro zone economic confidence, consumer confidence, Germany CPI, Thursday
US initial jobless claims, GDP, Thursday
Fed’s Loretta Mester, Mary Daly speak at events, Thursday
China PMI, Friday
Euro zone CPI, unemployment, Friday
US consumer income , University of Michigan consumer sentiment, Friday
Fed’s Lael Brainard and John Williams speak, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were flat as of 9:31 a.m. in Tokyo. The S&P 500 gained 2%
Nasdaq 100 futures were little changed. The Nasdaq 100 added 2%
The Topix index rose 0.3%
Australia’s S&P/ASX 200 Index added 1.9%
The Kospi index jumped 1.7%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The Japanese yen fell 0.2% to 144.37 per dollar
The offshore yuan weakened 0.3% to 7.1824 versus the dollar
The euro fell 0.3% at $0.9707
Cryptocurrencies
Bitcoin fell 0.3% to $19,515
Ether slipped 0.6% to $1,342
Bonds
The yield on 10-year Treasuries was steady at 3.73%
Australia’s 10-year yield declined 19 basis points to 3.91%
Commodities
West Texas Intermediate crude fell 0.5% to $81.75 a barrel
Gold was at $1,654.83 an ounce
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
