Market update: Hanging loose; Bank of Japan governor will step down early

Having suffered losses on Monday, US markets managed to bounce back on Tuesday, as better-than-expected corporate earnings rekindled investors’ desire for equities (S&P 500 +1.0%; Nasdaq +1.3%). Among those companies reporting, prestige beauty firm Estée Lauder (+6.0%) announced a higher quarterly profit and raised its full-year profit forecast. More than half of the S&P 500 firms have reported now and, encouragingly, 69% have beaten profit expectations. The tech-heavy Nasdaq was boosted by news that computer maker Dell had agreed to be taken private in a leveraged buyout worth US$24.4 billion – this is the largest deal of its kind since the Global Financial Crisis.

Overnight, Japan’s Nikkei climbed 3.8% to its highest level since October 2008. The key driver is news that the Bank of Japan’s governor Masaaki Shirakawa, along with his two deputies, is going to step down from office almost three weeks before the end of his five-year term. The Japanese yen weakened to 94.08 versus the dollar, as investors interpret the decision as evidencing a ‘clean break’ between former monetary policy practice and the potential for more aggressive loosening. In Europe this morning, markets are moving into positive territory (FTSE Eurofirst 300 +0.5%; FTSE 100 +0.5%) following a reassuring outlook from steelmaker ArcelorMittal (+2.7%).