Nikkei Tops 20,000 On Batshit Crazy BoJ Balance Sheet; Global Stocks Rise Ahead Of Jobs

Well, the Nikkei crossed 20,000 for the first time since 2015 overnight.

Nikkei

And really, why shouldn’t it? After all…

The move was of course also helped by the dollar (i.e. a weaker yen), which got a lift from Thursday’s ADP report.

“Sentiment for the dollar brightened as the Nikkei average reached 20,000, which we haven’t seen for a while, and the dollar could gain above 112 yen if tonight’s jobs data provide more positive signals,” Ryuta Taketomi, client manager of market trading office at Resona Bank’s treasury division said, before cautioning that it could be dangerous to “chase the dollar continuously as political risk surrounding President Trump is getting stronger ahead of Comey’s testimony.” So that’s amusing.

“The higher dollar-yen is encouraging a further rally in the Nikkei which started with general risk-on sentiment,” David Forrester, FX strategist at Credit Agricole CIB in Hong Kong remarked.”

JPY

Whatever’s left of the yuan bears after this week’s scorched earth policy in China got a little respite on Friday as the PBoC set the fix largely unchanged. Offshore interbank rates fell.

Yuan

It’s worth noting that analysts are (rightly) viewing the yuan as a unique case and don’t see its continued appreciation as a catalyst for the EM rally to run further. “Most market participants see gains in Asian emerging-market currencies as stretched,” Peter Chia, a foreign-exchange strategist at United Overseas Bank said, noting that “they’re unlikely to use the yuan’s spike as an excuse to buy into other EMs. Inflows may slow down next week before the Fed meeting.”

Meanwhile, oil is heading for its biggest weekly drop in 4 weeks as U.S. production hits its highest level since August of 2015 despite the slide in stockpiles. So now, rising production in the US is offsetting inventory draws, and the US more generally is offsetting OPEC. Fun shit.

“The lack of moderation in U.S. production is undercutting OPEC efforts to manage the market,” Michael McCarthy, chief strategist at CMC Markets said in Sydney overnight. “Demand is improving, so that will limit the downside, but getting above $55 a barrel will be very difficult.” Same old story.

WTI

Here’s a look across global equities, which are riding high ahead of payrolls.

  • Nikkei up 1.6% to 20,177.28
  • Topix up 1.6% to 1,612.20
  • Hang Seng Index up 0.4% to 25,924.05
  • Shanghai Composite up 0.09% to 3,105.54
  • Sensex up 0.4% to 31,268.86
  • Australia S&P/ASX 200 up 0.9% to 5,788.11
  • Kospi up 1.2% to 2,371.72
  • FTSE 7564.93 21.16 0.28%
  • DAX 12843.54 178.62 1.41%
  • CAC 5366.78 48.11 0.90%
  • IBEX 35 10987.00 106.00 0.97%
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