Today’s Stock Exchanges, January 18th. The Bank of Japan does not tighten its belt, relief on the markets
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The Central Bank of Japan played no surprise cards: it avoided further changes to its program to keep the yield curve under control, paving the way for a devaluation of the yen but avoiding rocking the boat again after surprising everyone in December with a move read in a restrictive key. The fluctuation band of long-term government bond yields remains unchanged, between minus 0.50% and 0.50%, and neither does the yield control curve (YCC) in force since September 2016, when the BoJ set a 0% target for 10-year government bond yields. The effect on the currency markets was immediate, with the yen weakening against the dollar to 130 from 128.40, retreating from the maximum in 7 months; on the other hand, the Tokyo Stock Exchange closed sharply higher (+2.5%).
The attitude of the central banks remains at the heart of the markets’ attention: today there were some declarations from the Fed governors, yesterday there were rumors of an ECB that could slow down the tightening (with an immediate beneficial effect on the BTPs and the state in general). In the meantime, investors are also reading the quarterly results. Last night Wall Street beat Goldman Sachs in its crisis of identity and rewarded Morgan Stanley, summarizes Bloomberg.
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Tokyo flies (+2.5%) after the BoJ: it does not touch monetary policy
Wall Street futures up slightly
Wall Street futures are slightly up pending various data: retail sales, producer prices and industrial production in December. The Dow Jones is up 0.07%, the Nasdaq is up 0.19% and the S&P 500 is up 0.15%.
Oil on the rise
Oil prices continue to rise. The abolition of the strict limits imposed by Covid in China leads to optimism about a recovery in fuel demand in the world’s largest importer of crude oil. Futures on WTI gain 1% to 80.98 dollars a barrel, those on Brent rise by 0.97% to 86.73 dollars.
Positive Asian stock exchanges
Asian stock markets continue to rise after the decision of the Boj to maintain an ultra-accommodative monetary policy. Excluding Tokyo, which closed in a sprint, the composite index in Shanghai rose by 0.14%, in Shenzhen it advanced by 0.17%. In Hong Kong, however, the Hang Seng index rose by 0.47%.
Tokyo flies (+2.5%) after the BoJ: it does not touch monetary policy
Tokyo stocks finished sharply higher with investors relieved after the Bank of Japan kept its monetary easing policy unchanged, making the yen cheaper. The benchmark Nikkei 225 index rose 2.50% to finish at 26,791.12, while the Topix gained 1.68% to 1,934.93.
The BoJ has in fact decided to keep its monetary policy unchanged, leaving the interest rate at -0.1%, contrary to speculation which saw it giving in to pressure for a tightening in order to counter the rise in inflation. Bank of Japan also decided to keep the yield control curve unchanged.
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