Stocks rise after Bank of Japan move, ahead of Fed
Posted September 21
TOKYO — World stocks rose Wednesday after Japan's central bank rejiggered its stimulus policies to have a greater influence over long-term interest rates and as investors looked ahead to the Federal Reserve's policy meeting.
KEEPING SCORE: Germany's DAX rose 1.3 percent to 10,524 and the FTSE 100 of Britain added 0.4 percent to 6,854. France's CAC 40 climbed 1.4 percent to 4,447. Wall Street looked set for a strong start, with S&P 500 and Dow futures both up 0.4 percent.
BANK OF JAPAN: Japan's central bank left its short-term policy rate at minus 0.1 percent but said it might cut it further to encourage banks to lend more. It also set a target for longer-term government bond rates. By pushing yields on long-term government bonds higher, the central bank would expand investment options for institutional investors such as life insurance companies. It also committed to providing stimulus until inflation exceeds the target of 2 percent annually, a promise that bolstered market sentiment.
FED TO FOLLOW: Investors doubt the Fed will raise interest rates when it wraps up its policy meeting on Wednesday, but are watching closely for hints about future moves. The central bank's statement and a press conference led by Fed Chair Janet Yellen will be the focus.
ANALYST VIEWPOINT: "The BOJ is hoping to more forcefully push up inflation expectations after they have recently fallen back," Shane Oliver of AMP Capital said in a commentary. "The BOJ also stressed that it is not out of bullets just yet, stating that it can cut rates further into negative territory, further expand asset purchases and further accelerate the expansion in the monetary base."
ASIA'S DAY: Tokyo's Nikkei 225 reversed its early losses, gaining 1.9 percent to 16,807.62. The Hang Seng of Hong Kong gained 0.6 percent to 23,669.90 and the Shanghai Composite index added 0.1 percent to 3,025.87. Australia's S&P/ASX 200 climbed 0.7 percent to 5,339.60 and South Korea's Kospi rose 0.5 percent to 2.034.77. Shares were higher in Taiwan and most markets in Southeast Asia.
ENERGY: Benchmark U.S. crude added 95 cents to $45.00 a barrel in electronic trading on the New York Mercantile Exchange. It gained 19 cents on Tuesday. Brent crude, used to price international oils, advanced 90 cents to $46.78 a barrel in London.
CURRENCIES: The dollar jumped initially following the Bank of Japan's policy announcement, but later fell back to 101.43 yen, below the previous day's 101.62 yen level. The euro edged down to $1.1143 from $1.1151.