LONDON, July 28 (Reuters): Stocks largely held their ground on Friday as investors pondered what a policy shift by the Bank of Japan would mean for global markets hoping that central banks were nearing the end of their rate hiking cycle and its fallout on assets.
US stock futures , were firmer, though the US Commerce Department is due to release its hotly anticipated Personal Consumption Expenditures (PCE) report before the opening bell on Wall Street.
The Bank of Japan made its yield curve control policy more flexible and loosened its defence of a long-term interest rate cap, seen by investors as a prelude to a shift away from years of ultra-loose monetary policy.
The yen initially jumped after the BOJ moves before going into a tailspin, while hopes for stimulus had Chinese stocks heading for their best week since last November.
Oil was on track for a fifth straight week of gains after news that the US economy grew faster than expected in the second quarter, but gold was braced for its biggest weekly decline in five weeks.
The MSCI All Country stock index was little changed at 700 points, still up more than 15% for 2023, returning to levels last seen in the second quarter of 2022.
"Equity markets are looking fairly positive on the basis that we are closer to the end of their rate hiking cycle than we have ever been," said Mike Hewson, chief markets strategist at CMC Markets.
In Europe, the STOXX index of 600 companies was down 0.2% after hitting a 17-month high on Thursday when the European Central Bank raised interest rates to their highest level in over two decades and left open the possibility of a pause at its next meeting.
The Dow Jones Industrial Average on Wall Street snapped its longest winning streak since 1987 on Thursday, but Patrick Spencer, vice chair of equities at Baird, believes that a bull market remains in place, even if a little overbought, and that a modest correction would be no surprise.
