Stocks hold their nerve after Bank of Japan shock

investing.com:

By Huw Jones

LONDON (Reuters) — Stocks largely held their ground on Friday as investors pondered what a policy shift by the Bank of Japan would mean for global markets hoping that central banks were nearing the end of their rate hiking cycle and its fallout on assets.

U.S. stock futures were firmer, though the U.S. Commerce Department is due to release its hotly anticipated Personal Consumption Expenditures (PCE) report before the opening bell on Wall Street.

The Bank of Japan made its yield curve control policy more flexible and loosened its defence of a long-term interest rate cap, seen by investors as a prelude to a shift away from years of ultra-loose monetary policy.

The move caps a big week for central banks, with interest rate rises in the U.S. and Europe in recent days seen as the final moves in the most aggressive hiking cycle in a generation, with the Bank of England meeting next week.

The yen initially jumped after the BOJ moves before going into a tailspin, while hopes for stimulus had Chinese stocks heading for their best week since last November.

Oil was on track for a fifth straight week of gains after news that the U.S. economy grew faster than expected in the second quarter, but gold was braced for its biggest weekly decline in five weeks.

The MSCI All Country stock index was little changed at 700 points, still up more than 15% for 2023, returning to levels last seen in the second quarter of 2022.

«Equity markets are looking fairly positive on the basis that we are closer to the end of their rate hiking cycle than we have ever been,» said Mike Hewson, chief markets strategist at CMC Markets.

In Europe, the STOXX index of 600 companies was down 0.2% after hitting a 17-month high on Thursday when the