Global Markets Weekend Wrap-Up: Bank of Japan Rate Hike Sparks Waves, Silver Hits New Highs, US Stocks Rebound, Risk Appetite Rises on the Eve of May Gold Week

Friday’s market close marked a rebound driven by multiple factors worldwide. The Bank of Japan announced a 25 basis point rate hike, which, despite raising concerns about yen depreciation, surprisingly improved market risk sentiment, with the VIX volatility index dropping over 11%, leading to broad gains in stocks, bonds, and commodities.

Commodity Market Highlights: Silver Surges Past $67

The precious metals market performed remarkably. Driven by increased global investment demand and supply tightness, silver prices soared to a record high, successfully breaking through the $67 level. Meanwhile, gold continued its cross-star pattern for the second consecutive trading day, quoting at $4,338.6 per ounce, up 0.14%. The oil market also did not lag, with WTI crude rising 1.14% to $56.50 per barrel, indicating a general upward trend in commodities.

Currency Market Volatility Intensifies, USD/JPY Approaches 158

Foreign exchange markets became a focal point of volatility. The USD/JPY exchange rate rose 1.39%, approaching the 158.0 level, hitting a recent high. The US dollar index increased 0.3% to 98.7, while EUR/USD dipped slightly by 0.12%. Japanese Finance Minister Shunichi Suzuki issued a warning about intervention, stating that appropriate measures will be taken to address excessive currency fluctuations, a direct response by the Japanese government following the rate hike by the central bank to stabilize financial markets.

US Stocks Rise Across the Board, Tech Leads Gains

Friday was the “quadruple witching” day for US markets, with total futures and options settlement values reaching $7.1 trillion. Against this backdrop, the three major indices all rose: Dow +0.38%, S&P 500 +0.88%, Nasdaq +1.31%. The China Golden Dragon Index also rebounded 0.86%.

Tech stocks led the rally, with Oracle up 6.6%, Nvidia and Broadcom rising 3.9% and 3.2% respectively, with Nvidia being the strongest performer among Dow components. However, not all tech companies benefited; Nike’s stock plunged 10.5% due to poor performance in China.

European markets also rose in tandem, with the UK FTSE 100 up 0.61%, Germany DAX 30 up 0.37%, and France CAC 40 up 0.01%.

Cryptocurrency Slightly Under Pressure

Crypto markets showed divergence from traditional equities. Bitcoin fell 0.34% in 24 hours, currently at $92,550; Ethereum rose 2.00% in 24 hours, now at $3,240. In Hong Kong night session futures, the Hang Seng Index futures closed at 25,843 points, up 118 points, with a premium of 152 points.

Bond Markets Adjust, Japanese Government Bond Yields Hit Nearly 25-Year Highs

The bond market faced adjustment pressures. The US 10-year Treasury yield rose 3 basis points to 4.15%, and the 2-year yield increased 3.2 basis points to 3.492%. Most notably, the 10-year Japanese government bond yield surpassed 2%, reaching a new high since 1999, reflecting market expectations of continued rate hikes by the Bank of Japan. The French 30-year government bond yield also rose to 4.525%, the highest since 2009, indicating rising political uncertainty in Europe.

The Far-Reaching Impact of the BOJ’s Policy Shift

The BOJ’s rate hike signifies a major shift in the global monetary policy landscape. Although the nominal interest rate differential for the yen remains, the “cost-effectiveness” of yen financing for highly leveraged global macro hedge funds has significantly decreased. Meanwhile, the US Federal Reserve’s Reserve Management Purchases (RMPs) exhibit similar quantitative easing effects, sparking market speculation whether the BOJ’s policy shift will accelerate the Fed’s rate cuts.

Fed officials’ comments suggest an unclear path for further rate cuts. New York Fed President Williams stated that there is no urgency for further rate adjustments, as recent employment and inflation data have not changed expectations. Cleveland Fed President Mester believes no rate adjustments are needed in the coming months, and at least until spring, the current policy stance should be maintained.

Consumer Confidence Remains Wary, Purchasing Power Expectations Decline

The US December Consumer Confidence Index rose 1.9 points to 52.9, below economists’ forecast of 53.5. The University of Michigan survey shows that despite signs of improvement at year-end, consumer confidence remains nearly 30% below the same period last year. The current conditions index fell to a historic low of 50.4, with perceptions of big-ticket purchases worsening to record lows, while the expectations index rose to a four-month high, indicating ongoing divergence in long-term consumer outlooks.

Policy and Industry Developments Continue to Evolve

US House Republicans are calling for military-grade export controls on AI chips, with any processors performing at or above Nvidia’s H200 level facing new export restrictions. Meanwhile, ByteDance, TikTok’s parent company, reportedly expects profits to reach $50 billion in 2025, a new record, approaching Meta’s annual earnings.

As Japan’s Golden Week in May approaches and global policy interactions become more complex, investors should closely monitor central bank policies, exchange rate fluctuations, and corporate earnings to seize market opportunities.