© Reuters. FILE PHOTO: Woman holding British Pound banknotes in this illustration taken May 30, 2022. REUTERS/Dado Ruvic/Illustration
By Tom Westbrook
SYDNEY (Reuters) – Asian stock markets rose on Thursday after Britain’s central bank launched an emergency bond-buying program to stabilize a violent sell-off in stocks, despite trading The pandemic has not gone well and the pound remains under pressure.
The Bank of England said it would buy up to £5 billion ($5.4 billion) of long-term government bonds a day until October 14. It spent about a billion pounds on Wednesday and profits The 30-year gold-plated yield fell 105 basis points, the steepest drop ever according to Refinitiv records stretching back to 1992.
The move boosted the pound and provided some relief from the bad mood in the markets, but by mid-morning in Tokyo, the pound struggled for support and fell 0.6 percent. down 1.0818 USD. [FRX/]
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 1.5% and was its best day in a month. up 0.9%. ()
“It’s all just a mess,” said ANZ economist Finn Robinson.
“How long the calm and fresh optimism lasts remains to be seen. First, this return of stimulus will lift rather than quell inflation in the UK, and that is bad for bonds and GBP.”
The impact of the non-refundable tax cuts announced in the UK last week has hit financial markets after sending British asset prices down. The BoE intervention follows steps in South Korea, India and Indonesia to stabilize their financial markets this week as the US dollar rallied across the board.
US Treasuries rallied in sympathy with the overnight drop, and the benchmark 10-year yield, which was up 4% a day ago, fell more than 20 bps to 3.7472%. [US/]
Wall Street also recovered, with a six-day losing streak followed by a nearly 2% gain. [.N]
The halted mood sent the US dollar march higher and had its worst day in 2-1/2 years as the greenback turned from its peak. It was soon trading steady again, however, in Asia on Thursday.
The dollar index rose 0.1% to 113.12, within an impressive distance of Wednesday’s 20-year high of 114.78. The euro fell about 0.5% to $0.9695.
The Australian dollar, meanwhile, edged up slightly on Thursday and traded just above $0.65 after a flurry of fresh data from the statistics agency showed some high inflation in July and August. [AUD/]
The dollar’s decline helped oil and gold gain, holding firm for the Asian day. Futures rose 0.2% to $89.50 a barrel. steady at $1,656 per ounce.
(1 dollar = 0.9252 pounds)