The yen strengthened toward its highest level since June, European stocks rallied and Brazilian equities fell sharply as global markets gingerly began trading after the tumult of 2022, when rising inflation pushed global stocks and bonds to their worst run in more than a decade.
(Bloomberg) — The yen strengthened toward its highest level since June, European stocks rallied and Brazilian equities fell sharply as global markets gingerly began trading after the tumult of 2022, when rising inflation pushed global stocks and bonds to their worst run in more than a decade.
The yen inched toward 130 per dollar, a level not seen since June on a closing price basis, amid sustained efforts by the Bank of Japan to depress yields on government debt. The stronger yen indicates traders believe the central bank will be forced to reduce its easy policy settings as inflation rises.
A rally in European equities pushed the Euro Stoxx 50 region-wide index of blue chips 1.7% higher Monday on the first trading day of the year. Brazilian shares tumbled 3.1% while South Korean stocks also traded Monday and fell 0.5%.
The mixed performance followed the sharp swings of last year that saw a fifth in value wiped from global stocks, the worst run since the financial crisis. Bonds lost 16% of value, the biggest decline since at least 1990 for one leading measure, as central banks raced to slow rising consumer prices by hiking interest rates around the world.
Read more: As Roads Split in 2022 Stocks, One Trade Made All the Difference
US stocks fell on Friday, the last trading day of 2022, despite a surge in dip-buying in the last hour of trading. The S&P 500 ended lower for a third day in the holiday shortened week, leaving the benchmark down almost 20% in 2022. The Nasdaq 100 closed down, shedding a third of its value last year as tech stocks emerged as some of the most vulnerable to rising rates. Treasuries also fell, sending benchmark 10-year yields to 3.8% from 1.5% at the start of 2022.
China purchasing managers index data to be released later today is set to show the fifth monthly contraction. Other data on the docket for Tuesday includes Australian house prices and German unemployment claims.
Read more: Treasury Strategists Expect Lower Yields, Steeper Curve in 2023
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