People walk by an electronic stock board of a securities firm in Tokyo, Monday, July 25, 2016.
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Europe and the USA remain on edge about terrorist attacks after (1) last Friday’s shooting spree at a shopping center in Munich that killed nine people, (2) a suicide bombing attack on Sunday at a music festival in the German town of Ansbach near Nuremberg that injured 12, and (3) a shooting at a Fort Myers, Florida night club on Sunday night that killed two people and wounded 14-16 people although there was no news as yet as to whether there were connections to terrorism.
KEEPING SCORE: Japan’s benchmark Nikkei 225 inched down 0.04 percent to finish at 16,620.29.
In Korea, the Kospi added 0.75% to 2,027.34, while Hong Kong’s Hang Seng Index was up 0.62% at 22,129.73. Australia’s S&P/ASX 200 gained 0.7 percent to 5,534.00.
Tokyo shares fell sharply on concerns the Bank of Japan won’t deliver on sky-high easing expectations, on an otherwise positive trading day for the region. The yen hit a two-week high against the euro and rose more than 1% against the dollar on Tuesday.
On Wall Street, the Dow Jones Industrial Average ended Monday, with a mild loss of 0.42%, while the S&P 500 dipped 0.3% and the Nasdaq 0.05%. Partly because of speculation about the stimulus plan, Japan’s Topix index has risen 8 percent since the upper-house election. The gains sent all three indexes to their fourth consecutive winning week, their longest streak since March.
Bank of Japan chief Haruhiko Kuroda said at the weekend he could ease policy further but also that there had been no discussion about the more radical option of “helicopter money” whereby the bank might directly underwrite government debt.
The Financial Times reported that Martin Weale, a member of the BOE’s rate-setting committee, had dropped his opposition to an easing and now favored immediate stimulus.
The yen hit two-week highs against the euro and more than one-week highs against the dollar as traders dialed back expectations of how much new stimulus authorities will inject into Japan’s ailing economy at the end of the week.
Chances are high that the US Federal Reserve will not alter its monetary stance at the July policy meeting that is set to start today, thus leaving interest rates unchanged.
Markets see nearly no chance of a hike by the Fed at its meeting on Wednesday, but are wary in case it acknowledges a recent improvement in USA economic data in a way that adds to the risk of a move later in the year. Interest rate futures are now pricing in a 52% chance of a rate hike by December, compared with less than 20% a week ago and up from 9% at the start of this month.
Tokyo is compiling a spending package worth about 20 trillion yen ($189 billion), government sources told Reuters last week, though actual public spending will be far less than the headline number suggests.
Brent crude futures traded at $45.40 per barrel, down 0.6 percent and near Friday’s $45.17 which was its lowest since May 11.
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Exporters were hit as the dollar nosedived to 104.41 yen from 105.82 yen in NY and 106.11 yen in Tokyo earlier Monday.
