Japan leads global stocks higher after stimulus move

Japan's core inflation rate was just 0.5% in 2015 on low oil prices while consumer spending fell 4.4% in December over a year earlier.

Source : PTI

Japan led global stock markets higher on Friday after its central bank introduced a negative interest rate policy in the latest move to overcome malaise in the third-biggest economy. The yen dived against the dollar and the euro. Britain's FTSE 100 rose 1.2% to 6,004.94 and France's CAC 40 advanced 1.4% to 4,382.73. Germany's DAX climbed 1.3% to 9,763.69. Futures indicated that Wall Street was set to extend gains. Dow futures added 1% and S&P 500 futures climbed 1.1%. The Bank of Japan said it is imposing a 0.1% fee on some deposits left with the central bank, effectively a negative interest rate. It hopes that will encourage commercial banks to lend more, rather than keeping cash at the BOJ, and stimulate investment and growth. Latest data showed Japan's core inflation rate was just 0.5% in 2015 on low oil prices while consumer spending fell 4.4% in December over a year earlier. "Concerns had been mounting that the BOJ were increasingly tapped out in their ability to ease monetary policy," Angus Nicholson, a market analyst at IG in Melbourne, Australia, said in a commentary. "The announcement opens the door to sustain further easing by the BOJ throughout the year."  After gyrating between losses and gains, Japan's Nikkei 225 finished up 2.8% at 17,518.30. The policy decision is a possible boost for the economy but viewed by investors as negative for banks. Shares of Mitsubishi UFJ Financial Group fell 3.8%. Hong Kong's Hang Seng gained 2.5% to 19,683.11 and the Shanghai Composite in mainland China rose 3.1% to 2,737.60. Australia's S&P/ASX 200 added 0.6% to 5,005.50 while South Korea's Kospi closed up 0.3% at 1,912.06. Stocks rose in Taiwan, India and Southeast Asia. The Kremlin said yesterday it is actively discussing the instability of oil markets with the world's key producers. Even though Russia said there was no concrete plan for a coordinated cut in production, it was enough to push the price of oil higher. Investors hope that talks could lead to production cuts that would begin to alleviate a global supply glut. Benchmark U.S. crude was up 35% to $33.57 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 92 cents, or 2.8% to close at $33.22 a barrel on Thursday. Brent crude, a benchmark for international oils, gained 38 cents to $35.18. The dollar jumped to 120.85 yen from 118.84 yen the previous day. The euro weakened to $1.0911 from $1.0932 but against the Japanese currency rose to 131.87 yen from 129.92 yen. January 29, 2016 | 06:20pm IST

The Dollar Business Bureau - Jan 29, 2016 12:00 IST