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The Journal Gazette

Friday, April 19, 2013 12:39 pm

Markets steady at end of bad week; yen falls again

By PAN PYLASAP Business Writer

Stocks looked to end a bad week on a steady note while the Japanese yen headed toward four-year lows against the dollar Friday as the country found little international opposition to its aggressive new monetary policy.

With economic news relatively light until a statement later from the world's 20 leading and industrial countries, traders around the world, like many others, were monitoring developments in Boston. Police have embarked on a manhunt for the surviving suspect in the bombing of the city's marathon earlier in the week after a gunfight early Friday morning left the other suspect and a police officer dead.

"A quiet day on the markets, with very little in terms of economic events on the whole," said Joshua Murphy at Alpari. "The focus of the world has become ever increasingly centered upon the ongoing crisis in Boston."

The unprecented scenes on the streets of Boston didn't affect trading too much - if at all - as stocks settled following a difficult week.

In Europe, the FTSE 100 index of leading British shares closed up 0.7 percent at 6,286 while the CAC-40 in France rose 1.46 percent to 3,651. Germany's DAX was 0.2 percent lower at 7,461.

The London markets closed before the announcement from U.S. credit rating agency Fitch that it was downgrading the UK score one notch from AAA to AA+.

In the U.S., the Dow Jones industrial average was 0.2 percent lower at 14,510, with a 7 percent fall in IBM weighing down on the index. IBM reported a decline in quarterly earnings and revenue late Thursday. The Dow is down 3 percent for the week.

The broader S&P 500 index was steadier, trading 0.7 percent higher at 1,551.

The focus in the markets is largely centered on Washington, where G-20 finance ministers and central bankers are wrapping up a two-day meeting Friday ahead of the wider gathering of the International Monetary Fund and the World Bank.

The G-20 statement later is expected to touch on the need for countries to encourage economic growth and avoid measures that might spark a currency war - where countries compete against one another to get the lowest exchange rate. Japan has been at the center of concerns recently as the yen weakens due to the central bank's aggressive monetary easing.

The meetings take place amid rising concerns over the U.S. and Chinese economies, the world's two largest. Those concerns have helped cause a big drop in stock markets as well as in the price of commodities, including oil and gold.

In the currency markets, the yen was back in focus with Japan's rivals reluctant to voice any opposition to the Bank of Japan's monetary stimulus program that is designed to lift the country out of a two-decade period of economic stagnation.

One of the consequences of the central bank's policy of pumping huge amounts of money into the domestic economy is the weakening of the yen. Though that is not a stated element of the policy, it has the potential to improve the competitive position of Japan's exporters, giving growth a lift.

"The yen is the biggest mover in the foreign exchange market today as the G-20 meeting passed without any notable criticism of Japan," said Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ.

The dollar was 0.9 percent higher at 99.11 yen. The last time it was above 100 yen was four years ago.

Elsewhere in the currency markets, the euro was solid as sentiment stabilized - when investors are willing to take on more risk and buy stocks, the euro usually benefits, too. It was trading 0.1 percent higher at $1.3066.

The greater risk appetite has also helped the price of oil recover, with the benchmark New York rate up 26 cents at $88.26 a barrel. Gold, which suffered massive sell-off earlier this week, was trading 0.5 percent higher at $1,399.5 an ounce.

Earlier in Asia, Japan's Nikkei 225 index rose 0.7 percent to close at 13,316.48. South Korea's Kospi added 0.4 percent to 1,906.75. Shares in mainland China also advanced, with the Shanghai Composite Index up 2.1 percent to 2,244.64 while the smaller Shenzhen Composite Index gained 2.2 percent to 943.42. Hong Kong's Hang Seng jumped 2.3 percent to 22,013.57.