U.S. stocks rebound while yen plunges on central bank stimulus

Best Buy

Best Buy Co. jumped 13%, the most since January, after Samsung Electronics Co. said it will staff mini-stores at Best Buy’s U.S. locations to showcase how its tablets, smartphones and televisions work together. Facebook Inc. added 2.6%, extending yesterday’s 3.3% rally, after introducing smartphone software that puts social-networking features front and center on a handset.

European Markets

Four shares declined for every one that gained in the Stoxx 600. Banca Generali SpA lost 5.1% after Assicurazioni Generali SpA sold part of its stake in the lender. European Aeronautic, Defence & Space Co. dropped 2.7% as an investor offered to sell shares worth 384 million euros ($492 million) in the owner of Airbus SAS. BTG Plc gained 1% after increasing its sales forecast for 2013.

Banco Espirito Santo SA and Banco Comercial Portugues SA, Portugal’s biggest banks, surged at least 4.8%, rebounding from yesterday’s declines of more than 8%.

Draghi said the ECB stands ready to cut interest rates if the economy deteriorates further, and officials are considering additional measures to boost growth as the debt crisis enters its fourth year.

“Our monetary policy stance will remain accommodative for as long as needed,” Draghi said at a press conference in Frankfurt today. “We will assess all the incoming data in the coming weeks and we stand ready to act.”

ECB Tools

With doubts growing about Draghi’s forecast for an economic recovery later this year, the ECB is looking at a range of measures including lower rates, more long-term loans to banks and a program to encourage lending to small- and medium-sized companies, three officials with knowledge of the deliberations said this week. The ECB president said today that officials are “looking at various instruments,” though he stopped short of saying what they would be.

Spain’s two-year note yield dropped five basis points to 2.15% and Italy’s fell nine basis points to 1.58%.

Hungary’s benchmark equity gauge climbed 0.8% as the country’s central bank new chief, Gyorgy Matolcsy, said he will use foreign-currency reserves as part of a 500 billion-forint ($2.1 billion) program to boost lending and support the economy. The forint strengthened 0.7% against the euro.

The MSCI Emerging Markets Index fell 0.7% to a two- week low as Hyundai Motor Co. and Kia Motors Corp. sank more than 3% after recalling vehicles for electronic defects. Benchmark gauges in India, Indonesia and South Korea lost more than 1%.

The yen slid more than 2% against all of its 16 major peers, dropping the most versus the dollar since Oct. 31, 2011, when the government ordered an intervention in foreign- exchange markets to weaken the currency. It tumbled 3.9% against the euro.

Japan Easing

BOJ Governor Haruhiko Kuroda began his campaign to end 15 years of deflation with a strengthened stimulus program that will see the central bank buy 7 trillion yen ($74 billion) of bonds a month, exceeding the median 5.2 trillion yen predicted by economists in a Bloomberg News survey.

The Topix index of stocks rose 2.7%, erasing an early 2% decline, with trading volume 32% more than the 30-day average.

Japan’s central bank has taken “quite an aggressive move,” said Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion. “It shows the Bank of Japan is more serious than they’ve ever been. They are already quite close to doing open- ended quantitative easing anyway and they are likely to announce that later in the month.”

Bloomberg News

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