Yen Surges as Oil Reaches Six Week Highs

Summary

The yen strengthened sharply to around 156 per dollar, extending its weekly gain to 2.5% as speculation over Japanese intervention and a possible Bank of Japan rate rise intensified. Oil held near six-week highs, with Brent at $95.52 a barrel after gaining 7% this week. Asian equities advanced, led by a strong rise in Hong Kong, while US and European equity futures were broadly flat.

Equities

The FTSE 100 closed 0.7% higher at 10,831.52 on Thursday, while the FTSE 250 also gained 0.7%, rebounding from a near one-month low. UK stocks recovered as government bond yields eased ahead of Friday’s US employment report, with the 10-year gilt yield falling 9.5 basis points from Wednesday’s 18-year high.

Precious metals miners led the UK market on Thursday, rising 3.4% as gold and silver prices strengthened. Banks gained 1.4%, while AstraZeneca closed 1.4% higher as the wider healthcare sector advanced 0.6%.

WPP rose 5.6% on Thursday after a media report said rival Publicis had secured PepsiCo’s media account, improving WPP’s prospects of retaining Coca-Cola’s business outside the US. Vodafone gained 2.4% after launching its own television service in Britain alongside a premium mobile offer promising faster speeds. Haleon fell 2.3% despite securing improved shelf space at Walmart and Target in the US.

Hilton Food Group jumped 12.2% on Thursday to reach a one-year high after raising its annual profit forecast, making it one of the strongest performers in the FTSE 250.

In the US, the S&P 500 closed 1.06% higher at 7,747.71 on Thursday, while the Nasdaq Composite rose 1.40% to 26,584.06 and the Dow Jones Industrial Average gained 1.18% to 53,686.11. All three major indices finished at least 1% higher as expectations for a September Federal Reserve rate increase eased following comments from Fed Governor Christopher Waller.

Nvidia gained 1.8% on Thursday after announcing a $12.9 billion acquisition of developer platform Hugging Face. Broadcom moved in the opposite direction, falling 2.7% after its fourth-quarter revenue forecast came in below expectations.

Snowflake surged 16.6% on Thursday after raising its annual revenue forecast, while Salesforce, ServiceNow and Adobe gained between 2.1% and 6.5%. Strategy jumped 17.6%, Coinbase rose 10.1% and Robinhood climbed 16.6% as cryptocurrency-linked stocks rallied following a rebound in bitcoin.

Forex & Commodities

The US dollar was slightly firmer early on Friday, with the dollar index at 99.02, although it remained on course for a weekly decline. Sterling was steady at $1.353, while the euro was unchanged at $1.163. The Japanese yen strengthened to 155.3 per dollar during Friday morning trading before reversing to 156.4, leaving it on track for its strongest week in more than a month.

The yen’s recent rise has coincided with increased expectations that the Bank of Japan could take a more hawkish stance at its 17–18 September meeting. Japan’s top currency diplomat Atsushi Mimura also said on Friday that authorities remained alert to exchange-rate moves and were in constant contact with US officials.

The Australian dollar rose to $0.7209 early on Friday, while the New Zealand dollar advanced to $0.5899 after the Reserve Bank of New Zealand raised its cash rate by 25 basis points to 2.75% on Wednesday and signalled further tightening.

Spot gold was steady at $4,469 per ounce early on Friday after rising 2% on Thursday. The move followed comments from Federal Reserve Governor Christopher Waller, who said he would support leaving US interest rates unchanged in September if forthcoming data showed inflation pressures continuing to moderate. Markets subsequently reduced expectations of a September increase, with the probability of a move around 50%.

Oil prices rose early on Friday as renewed US-Iran hostilities increased concerns over Middle East supplies. Brent crude gained 0.6% to $96.06 a barrel, while WTI rose 0.9% to $92.10. Brent was heading for a 7.6% weekly increase and WTI for a 10.4% gain, their strongest weekly performances since mid-July.

Attention on Friday turns to US nonfarm payrolls, due at 12:30 GMT, ahead of the Federal Reserve’s 15–16 September meeting. US CPI inflation data is due next week.