SINGAPORE – Global stocks steadied on Thursday, taking comfort from company earnings, while a collapse in the yen after Japan doubled down on anchoring bond yields drove the dollar toward its highest levels in decades.
The yen dropped to a 20-year low and breached the 130-to-the-dollar level after the Bank of Japan vowed to buy unlimited amounts of 10-year bonds daily to defend its yield target. The yen was last at 130.11 per dollar.
The BOJ's move was in stark contrast with investors' conviction that US interest rates are about to start going up fast and it jolted the dollar higher across Asia and against majors.
The US dollar index hit a five-year high of 103.55 and is not far from its 2017 peak of 103.82. An energy crisis in Europe hasn't helped the common currency, either, and the euro was testing major support at $1.05.
The dollar also made a two-month high on the Aussie an 18-month high on the yuan, a 21-month high on the kiwi and an almost two-year top on the Swiss franc.
"The most important theme (in markets) are the monetary policy differences between the US and the rest of the world, especially Asia," said Kiyong Seong, lead Asia macro strategist at Societe Generale in Hong Kong.
"Even though the market already anticipated the BOJ would remain accommodative, finding out again has led to an exaggerated move," he said.
In equities, Nasdaq 100 futures were up 1.4 percent and S&P 500 futures rose 0.8 percent after Facebook owner Meta beat Wall Street forecasts and said it had eked out user growth, sending its shares up almost 20 percent after hours.
A rally in Microsoft shares through Wednesday had also helped Wall Street indexes to a steady close.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.6 percent, led by a 1 percent bounce in Australia's commodity-heavy bourse.
Standard Chartered also turned in a forecast-beating 6 percent rise in first-quarter profit on Thursday.
Japan's Nikkei rose 1.5 percent and was heading for its best day in two weeks as investors cheered the weaker currency and Bank of Japan's vows of policy support. Japanese government bonds had their best rally in a month.
"The BOJ is not promoting a weak yen, but their policy is in a way supporting a weak yen," said Bart Wakabayashi, branch manager at State Street Bank in Tokyo.
"I think most people would have agreed 130 is in play, but now it's a foregone conclusion."
European futures rose 0.5 percent and FTSE futures rose 0.3 percent.
Looming over markets is uncertainty about the economic fallout of conflict in Ukraine, highlighted by Russia's halt on gas supply to Poland and Bulgaria on Wednesday.
Set against that is investors conviction that US rates are rising and that next week's Federal Reserve meeting will bring the first of several consecutive 50-basis-point hikes.
US growth data, due later in the day, may temper that path a little bit if – as trade figures on Wednesday suggested – it is wavering, but a major focus is on consumers and whether they can keep company earnings ticking over even as rates go up.
"Consumers are still, for now, taking higher prices in their stride. It's enough cheer for (stock) markets," said Seng Wun Song, an economist at CIMB Private Bank in Singapore.
"It's all about whether consumers are confident enough to carry on."
Treasuries were steady in the Asia session, nursing small Wednesday losses, with two-year yields at 2.5970 percent and benchmark 10-year yields at 2.8301 percent.
Oil wobbled lower on Chinese demand concerns, and Brent crude futures were last down 1.5 percent at $103.71 a barrel.
Palm oil touched a seven-week high after major producer Indonesia widened its export ban.