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Hong Kong - The yen extended gains after Bank of Japan governor Haruhiko Kuroda dismissed the use of so-called helicopter money as stimulus.
European stocks fell from a four-week high and the euro was little changed before the region’s central bank policy meeting.
Japan’s currency strengthened against all 16 of its major peers after Kuroda said there is no need and no possibility for helicopter money. The euro hovered near a three-week low amid speculation the European Central Bank will leave rates unchanged and signal further easing for later in the year.
A measure of corporate credit risk fell to a four-month low. The Stoxx Europe 600 Index retreated, with share of airlines sliding after Deutsche Lufthansa cut its earnings forecast.
Turkish stocks fell the most worldwide after the president called for a state of emergency and S&P Global Ratings cut the country’s credit score.
"Kuroda has just given investors a bit of a disappointment," said Peter Garnry, head of equity strategy at Saxo Bank in Hellerup, Denmark.
"The market had actually changed its sentiment and pricing based on the assumption that we would get something big on the fiscal stimulus side, and that Japan would be the first wave."
Almost $5trn has been added to the value of global equities since June 27 amid signs central banks including the BOJ will boost stimulus to shore up economies after the UK voted to leave the European Union.
Earnings have also played a part, with better-than-estimated results helping lift the S&P 500 Index to a record. Starbucks Corporation, AT&T and General Motors Company are scheduled to report results on Thursday.
Currencies
The yen jumped 1.3% to 105.54 per dollar at 10:42 a.m. in London. Speaking in a BBC Radio 4 program broadcast on Thursday, Kuroda also repeated that he is determined to rid Japan of its deflationary mind set and that there are no significant limitations to further monetary easing if needed by the Bank of Japan.
The euro was little changed at $1.1020. ECB President Mario Draghi has predicted that euro-area growth will slow as a result of Brexit, suggesting a response is needed.
"Draghi will keep his options open for further easing," helping fuel a gradual decline in the euro amid broad dollar strength, said David Forrester, a foreign-exchange strategist at Credit Agricole’s corporate and investment-banking unit in Hong Kong.
"The yen has already sold off a lot in anticipation of the government’s fiscal stimulus package and next week’s BOJ meeting. We’re looking for it to continue tracking lower."
New Zealand’s dollar dropped 0.7% after the Reserve Bank of New Zealand said further monetary easing is likely to be required to lift inflation, reinforcing expectations interest rates will be cut next month.
The Bloomberg Dollar Spot Index fell 0.2%, after four days of gains. A Citigroup gauge that tracks the degree to which American economic data are exceeding projections is at an 18-month high and futures put the chance of a Federal Reserve interest-rate increase this year at 47%, up from 9% at the end of June.
Stocks
The Stoxx 600 slipped 0.5%, with the volume of shares changing hands about 24% lower than the 30-day average. S&P 500 futures expiring in September lost 0.2%, while the MSCI All-Country World Index gained 0.1%, trading at its highest level since November.
Lufthansa tumbled 8.4%, and EasyJet slid 5% after posting a drop in quarterly revenue. Tele2 AB lost 6.4% as its earnings missed estimates. Hermes International SCA gained 3.4% as the luxury clothing and handbag maker said its profitability improved. Miners in the Stoxx 600 advanced for the first time in three days.
In the US, Intel slipped 2.8% in early New York trading after reporting slower growth in its server-chip division, while Qualcomm gained 6.5% as its results showed the chip maker is overcoming hurdles in China.
Joy Global rallied 20% after Japan’s Komatsu, the world’s second-biggest mining and construction equipment maker, agreed to buy it. Komatsu added 2.3%.
The Borsa Istanbul 100 Index slumped 3.8%. Turkey imposed a three-month state of emergency as the government pursues those responsible for last week’s failed military coup, detaining thousands of army officers, judges and prosecutors. A wider purge is under way that encompasses universities, schools and the civil service.
The country won’t be under military rule, with army units taking orders from provincial governors, President Recep Tayyip Erdogan said in Ankara on Wednesday.
The FTSE Bursa Malaysia KLCI Index dropped 0.7%. US prosecutors said they plan to seize assets after more than $3.5 billion was misappropriated from 1Malaysia Development Berhad, a state development fund known as 1MDB that was previously headed by Prime Minister Najib Razak.
Singapore said it seized S$240m ($177m) in assets linked to the alleged fraud. The ringgit slid 0.4%.
Commodities
Oil for September delivery was little changed at $45.78 a barrel in New York after weekly US government data showed crude stockpiles fell for a record ninth week and refining activity climbed to a 2016 high.
Gold rose 0.5% to $1 322.34 an ounce.
Bonds
Germany’s 10-year bond was little changed, with the yield at minus 0.005%. The yield on similar-maturity US Treasuries was 1.58%. It sank to a record 1.32% on July 6 and analysts see it ending the year at 1.74%, a Bloomberg survey shows.
New Zealand’s 10-year yield declined three basis points to a two-week low of 2.26%. Swaps traders are pricing in an 89% chance the RBNZ will cut its interest rate from a record low next month, up from 64% a week ago.
The cost of insuring investment-grade corporate debt against default dropped to the lowest since March 11.
The Markit iTraxx Europe Index of credit-default swaps declined one basis point to 68 basis points. A gauge of swaps on junk-rated companies fell five basis points to 318 basis points, near a six-week low.
