The Bank of Japan on Friday made a decision to loosen monetary policy further, in step with the government’s move to implement a stimulus package worth over ¥28 trillion.
Advertisement
The Bank of Japan ended a policy meeting Friday by announcing it will expand purchases of assets from financial institutions to help inject more cash into the world’s third-largest economy and pursue its 2 percent inflation target.
German bonds followed their Japanese and US peers lower after the BOJ expanded its purchases of exchange-traded equity funds, while refraining from making a deeper cut to its negative interest rate or boosting the amount of government debt it buys. It left its purchases of Japanese government bonds static at an annual rate of 80 trillion yen and held its key interest rate unchanged at -0.1%.
The yen rose to as high as 103.30 to the dollar from 105.30 in late US trade on Thursday, which market players largely attributed to the result of “fat finger” orders exacerbated by thin trading conditions as there was no apparent news to justify such a big move.
“Japan’s economy is likely to be on a moderate expanding trend”, the central bank said.
Japan’s Nikkei .N225 , which swung between gains and losses right after the announcement, was last trading down 1.5 percent.
The index, which touched a seven-week high last week, was on track for a 0.4 per cent weekly drop, but a gain for July of 6.4 per cent. The dollar fell 1.8 percent to 103.35 yen JPY= , its biggest one-day decline since June 24 – the day after the UK’s decision to leave the European Union – having earlier fallen below 103.00.
The Dow Jones industrial average .DJI fell 14.31 points, or 0.08 percent, to 18,442.04.
The leading index of 300 European shares rose 0.4 percent to 1,244 points, and Germany’s DAX GDAXI also rose 0.4 percent. US West Texas Intermediate (WTI) crude rose 15c to $41.29 a barrel.
IG’s Joshua Mahony was unsurprised by BoJ undershooting market forecasts, citing the policy calls by European Central Bank and Bank of England this month. Consumer prices, excluding fresh food, are expected to rise only 1.7 percent in the next fiscal instead of 2.7 percent projected in April. The S&P 500 .SPX rose 4.86 points, or 0.22 percent, to 2,174.92 and the Nasdaq Composite .IXIC added 11.08 points, or 0.21 percent, to 5,166.07.
OIL: In the energy market, benchmark USA crude lost 1 cent to $41.13 on the New York Mercantile Exchange. USA futures augured a lower opening on Wall Street, with the Dow futures down 0.2 percent and S&P futures also 0.2 percent lower.
Advertisement
Global benchmark Brent crude futures dropped 0.6 per cent to US$42.45. It is down 7.6 per cent this week and 15 per cent this month.
