U.S. stock futures: Intel falls over 2% pre-market, European stocks generally rise, the dollar rebounds, and spot gold increases.

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The Bank of Japan kept interest rates unchanged at its policy meeting, but unexpectedly announced the start of ETF sales, dragging down Asian stock markets and causing the record-breaking global equity rally to stall.

On Friday, before the US market opened, Intel fell more than 2%. FedEx rose over 5% due to strong first-quarter results and positive future guidance. European stocks opened higher. The US dollar strengthened, and most Asian currencies weakened on Friday, with the Indian rupee under pressure and once again at risk of falling to a record low. Gold rose while US Treasury prices fell.

Before the US market opened, Intel fell more than 2%. FedEx rose over 5% due to strong first-quarter results and positive future guidance.The German DAX30 opened up 0.24%. The UK FTSE 100 opened up 0.03%. The French CAC40 opened up 0.26%. The Euro Stoxx 50 opened up 0.07%.The Nikkei 225 closed down 0.6% at 45,045.81 points. The TOPIX closed down 0.4%. Korea's KOSPI closed down 0.5%.10-year US Treasury yield rose 2bp to 4.131%.The yield on Japan's 40-year government bond fell 7.5 basis points to 3.36%. The yield on Japan's 5-year bond rose to the highest level since 2008.The US dollar index rose 0.23% to 97.59.The GBP/USD fell 0.5% to a daily low of 1.34835.The Indian rupee briefly fell to 88.32 per US dollar, very close to the record low of 88.4550 set last week. As of the latest quote, the rupee stood at 88.30.The Korean won, Indonesian rupiah and other Asian currencies fell 0.5%.Spot gold rose 0.25% to $3,653.42.

The Bank of Japan Shifts, Weighing on Japanese Stocks and Bonds

The Bank of Japan announced on Friday that it would begin an ETF sale plan of a scale similar to the early 2000s disposal of equities purchased from banks. While leaving rates unchanged as expected, this asset sale plan immediately put pressure on the Japanese market.

Japanese stocks gave up all earlier gains, and Japan's two-year government bond yield climbed to its highest since 2008. Strategist Mark Cranfield analyzed:

"Japanese government bond futures are being heavily sold and the two-year yield is soaring, a strong signal that traders are now pricing in a rate hike for October. It now looks almost certain, and only a major setback in US trade could prevent a 25bp hike."

The Bank of Japan's move comes as investors are becoming increasingly wary of the sustainability of the global "everything rally." For weeks, as the S&P 500 kept setting new highs, worries about a budding market bubble have been rising, with excessive valuations often cited as the main risk.

Amy Xie Patrick, head of income strategy at Pendal Group, points out that some investors are exhibiting "herd" behavior and failing to make independent market assessments. She states:

"This is a big question for me—how long this rally in equities can last."

The US Dollar and Yields Both Rebound

Driven by the market's interpretation of Fed policy, the US dollar index has rebounded from Wednesday's post-Fed low of 96.22 to 97.46. Meanwhile, the yield on the very rate-sensitive 2-year US Treasury climbed more than 10 basis points from its Wednesday intraday low.

In addition, data released on Thursday showed US initial jobless claims fell last week, reversing the previous week's increase. This positive economic data also supported the rise in the dollar and Treasury yields.

Analysts noted that although the Fed cut rates at its meeting and signaled more to come, Chairman Powell's press conference was more hawkish than the market originally expected. This "hawkish cut" messaging reversed market expectations and was the key driver behind the rebound in the dollar and US Treasury yields.

The US dollar index rose 0.23% to 97.59.

10-year US Treasury yield rose 2bp to 4.131%.

Spot gold rose 0.25% to $3,653.42.

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