BANGKOK (AP) — Global stocks were mixed Wednesday, with Tokyo gaining more than 2% after Japan’s central bank kept its loose monetary policy unchanged, allaying speculation it would cave to pressure to tighten credit for counter rising inflation.
Germany’s DAX lost 0.1% to 15,170.03 and Paris’ CAC 40 was down less than 2 points to 7,075.91. Britain’s FTSE 100 was also almost unchanged at 7,850.12.
Futures for the S&P 500 and the Dow Jones Industrial Average were almost unchanged.
The Bank of Japan rocked markets in December with a surprise widening of its target range for long-term government bond yields as part of its “yield curve control policy.” He maintained that range in his latest policy statement, despite recent instances where 10-year government bond yields exceeded the daily 0.5% upside or downside limit.
With Wednesday’s decision, the key BOJ interest rate remains at minus 0.1%.
“By keeping its key rate control policy and yield curve unchanged at today’s meeting, the Bank of Japan probably wanted to send a message to the market: Don’t fight the BOJ,” economists at ING Economics said in a report.
Inflation has been more subdued in Japan than in the US and many other countries, but prices have been rising as the cost of oil and gas and other imports have risen. Moves by other central banks to raise interest rates to quell decades of high inflation have lowered the value of the Japanese yen, putting further pressure on Tokyo’s monetary stance.
Core inflation in Japan, excluding volatile food and energy costs, is forecast to rise to 1.8% in the fiscal year ending in March, and wages have not risen much.
“Regarding risks to the outlook, extremely high uncertainties remain for Japan’s economy,” a BOJ statement said. He cited threats from rising interest rates, disruptions from the war in Ukraine, and persistent disruptions from the pandemic as the main reasons for concern.
Still, expectations of a change in the longstanding easy money policy, aimed at avoiding deflation, have been building as market watchers await the departure of BOJ Governor Haruhiko Kuroda, who is due to resign in April.
After the BOJ announcement, the dollar gained strongly against the Japanese yen, topping out at 131 yen but then falling to 129.81 yen, from 128.17 yen on Tuesday night.
Tokyo’s Nikkei 225 gained 2.5% to 26,791.12. Australia’s S&P/ASX 200 rose 0.1% to 7,393.40, while Hong Kong’s Hang Seng rose 0.5% to 21,678.00. The Shanghai Composite Index was broadly unchanged at 3,224.41.
Bangkok’s SET gained 0.1% while Mumbai’s Sensex rose 0.6%.
On Wall Street, stock indices closed mixed on Tuesday as investors focused on a busy week of corporate earnings to learn how much damage inflation is inflicting on the economy.
The S&P 500 fell 0.2%, ending a four-day winning streak. The Dow Jones Industrial Average fell 1.1%, while strength in technology stocks helped the Nasdaq Composite post a 0.1% gain. The Russell 2000 Index fell 0.1%.
The markets were closed on Monday for a holiday. The year is off to a strong start for Wall Street after a dismal 2022, but investor sentiment could turn around quickly as companies report results for the October-December quarter.
Analysts expect companies in the S&P 500 to report a drop in earnings for the fourth quarter from a year earlier. That would mark the first such drop since 2020, when the pandemic was crushing the economy.
Among the companies that reported their latest results this week: Netflix, M&T Bank and Procter & Gamble.
Inflation and how the Federal Reserve will continue its fight against high prices remain top concerns for investors as they review earnings results and corporate statements.
Wall Street will get another inflation update on Wednesday, when the government issues its December report on wholesale inflation, which tracks prices before they’re passed on to consumers. The government will also release retail sales data for December, which could give investors a better understanding of how inflation is affecting consumer spending.
Consumer inflation has been declining for six straight monthsraising hopes that the Fed may soon consider easing interest rates, even though it has said it will keep raising rates this year and doesn’t expect rate cuts until 2024.
In other trading, benchmark US crude gained 69 cents to $80.87 a barrel in electronic trading on the New York Mercantile Exchange. It added 32 cents to $80.18 a barrel on Tuesday.
Brent crude, the standard price for international trade, rose 52 cents to $86.44 a barrel.
The euro rose to $1.0839 from $1.0790.
