Global Markets on Edge: Rate Cuts and Surprising BoJ Moves Shape Investment Landscape

Global markets are buoyed by expected rate cuts, but volatility persists as the Bank of Japan surprises with dissenting votes and asset sales. Investors keenly await further policy signals from central banks, with Wall Street reaching record highs, and significant movements noted in the technology and forex sectors.

Asian markets experienced weekly gains by Friday, fueled by hopes for worldwide rate cuts. However, the Nikkei reversed record highs after the Bank of Japan hinted at scaling back its significant stimulus policies. In contrast, European stocks were predicted to open flat, with little change in EUROSTOXX 50 futures.

Significantly, the BOJ retained its 0.5% short-term interest rates, though two members advocated for a hike. In a surprise move, the BOJ announced plans to sell its considerable holdings of ETFs and REITs. Japan's core inflation hit 2.7% in August, exceeding the central bank's target of 2% but marking the slowest increase in nine months.

Investors were caught off guard by the unexpected dissent and asset sales, leading the Nikkei to drop 0.3%, tempering its weekly gain to 0.9%. The yen strengthened slightly against the dollar, while bond yields and trading activity surged across multiple markets, highlighting investor anticipation ahead of a critical BoJ briefing.

(With inputs from agencies.)