The premier’s 28 trillion yen ($265.30 billion) stimulus package, which exceeds initial estimates of around 20 trillion yen, includes 13 trillion yen in “fiscal measures”, Jiji reported. Germany’s DAX index rose 0.8 percent and has recouped all losses incurred since Britain’s June 23 vote to leave the European Union.
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It rose 0.1 percent on Wednesday to stand within sight of a four-month high hit at the end of last week.
Cutting interest rates into negative territory has proved unpopular with the public and the government, so deepening those cuts is a less likely option, sources familiar with central bank thinking say.
Abe has ordered his government to craft a stimulus plan to revive an economy dogged by sluggish consumption and investment, despite three years of his “Abenomics” mix of hyper-easy monetary policy, spending and promised reforms. This would be more than expected earlier, but critics will be watching to see how much is actually new spending. Stocks in mainland China also fell but shares in Taiwan, Singapore and Indonesia were stronger.
“Still, we are cautious on the second half and we don’t think central banks will rush into tightening policy with the global growth outlook bleak and uncertain”, he said. Stocks were slightly higher in early trading on Tuesday, July 26, 2016, as investors monitor corporate earnings from the likes of Gilead, McDonald’s, Texas Instruments and others.
BOJ governor Haruhiko Kuroda is widely expected to announce a fresh stimulus on Friday.
Money market futures are pricing in a almost 50 per cent chance of a Fed rate hike by December. It was sitting at 105.54 yen after the announcement.
“It’s good for equities”.
“There’s still room for disappointment from the Bank of Japan”, said Stephen Innes, senior trader at FX broker OANDA.
Reuters, citing an article in the Nikkei newspaper, states that “support is growing within the Bank of Japan for additional monetary easing on Friday with several options being floated as possibilities”.
The five-year yield fell 3.5 basis points to a record low of minus 0.380 percent.
OIL: Benchmark U.S. crude dropped 22 cents to $42.70 per barrel on the New York Mercantile Exchange.
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Trade group American Petroleum Institute (API) said Tuesday that US crude stockpiles fell by 827,000 barrels last week, much less than analysts’ expectations for a drawdown of 2.3 million barrels.
