SINGAPORE Global stocks went up on Thursday, taking comfort from company earnings, while a collapse in the yen came to a close after Japan doubled down on bond yields drove the dollar to 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 pledged to buy unlimited 10 year bonds daily to defend its yield target. The yen was last at 130.11 per dollar.
The move of the BOJ was in stark contrast to investors belief that the U.S. interest rates are about to start going up fast and jolted the dollar higher across Asia and against majors.
The U.S. 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, 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.
Kiyong Seong, Asia's leading Asia macro strategist at Societete Generale in Hong Kong said that the monetary policy differences between the U.S. and the rest of the world are the most important themes in markets.
Finding out again has led to an exaggerated move, he said, even though the market already anticipated the BOJ would remain accommodative.
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 sent its shares up almost 20 percent after hours.
The Wall Street indexes were close to a steady close after a rally in Microsoft shares through Wednesday.
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 saw a 6 percent increase in first-quarter profit on Thursday, sending its Hong Kong-listed shares up more than 12 percent.
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 promise of policy support. Bart Wakabayashi, a branch manager at State Street Bank in Tokyo, said the BOJ is not promoting a weak yen, but their policy is in a way supporting a weak yen.
I think most people would have agreed that 130 is in play, but now it is a foregone conclusion. There is uncertainty over markets about the economic fallout of war in Ukraine, highlighted by Russia halt on gas supply to Poland and Bulgaria on Wednesday and lingering lockdowns in China, which are all but limiting activity.
The investors conviction that U.S. rates are rising is set against that and that next week s Federal Reserve meeting will bring the first of several consecutive 50 basis-point hikes.
The U.S. growth data may temper that path a bit if trade figures on Wednesday suggest that it is waning, but a major focus is on consumers and whether they can keep company earnings ticking over even as rates go up.
Consumers are still taking higher prices in their stride. It is enough cheer for stock markets, said Seng Wun Song, an economist at the CIMB Private Bank in Singapore.
It's all about whether consumers are confident enough to carry on. The 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.
Brent crude futures were last down 1.5 percent at 103.71 a barrel, despite oil wobbled lower on Chinese demand concerns.