Japan easing boosts Asia's stock, but not Europe's
Japan's central bank boosts bond-buying in an effort to lower interest rates. Japan's Nikkei index jump to a four-month high, but European stocks are unmoved.
In this 2011 file photo, the Bank of Japan building is reflected on the glass covering the plate of its adjunct museum in Tokyo. Japan's central bank expanded its monetary easing by 10 trillion yen ($126 billion) Wednesday, Sept. 19, 2012, moving to nurture the country's feeble economic recovery. Asian markets rose on the news, but European stock markets were flat.
Shizuo Kambayashi/AP/File
Japan'蝉听main stock market hit a four-month high Wednesday after the country's central聽bank eased monetary policy to shore up fragile economic growth, but the positive momentum ground to a halt in聽Europe.
The聽Bank聽of聽Japan聽said it was increasing its asset purchasing fund to 55 trillion yen ($700 billion) from 45 trillion yen to counter the strength of the聽Japanese currency. A strong yen makes it more difficult for Japanese companies to compete in international markets.
The聽Bank聽of聽Japan'蝉听move comes days after the聽U.S. Federal Reserve聽revealed it will purchase an average of $40 billion a month in mortgage-backed securities until the economy shows significant improvement. The Fed's goal is to lower long-term interest rates and encourage more borrowing and spending. The Fed also said it plans to keep its benchmark short-term interest rate near zero until mid-2015.
Stock markets, which tend to respond favorably to actions targeting economic growth, rallied sharply following the Fed's announcement. However, outside of聽Asia, where聽Japan'蝉听Nikkei 225聽stock index rose 1.2 percent to 9,232.21, its highest close in more than four months, the response to the BoJ move has been far more modest.
"Perhaps we are seeing investors suffering from a bout of central聽bank聽fatigue, or perhaps it is a dawning realization that, even with policymakers dispensing cash left, right and center, there is still a slowing global economy to deal with," said Chris Beauchamp, market analyst at IG Index.
In Europe, the聽FTSE 100聽index of leading British shares was flat at 5,871 while聽Germany'蝉听DAX聽was down 0.1 percent at 7,342. The CAC-40 in聽France聽was also 0.1 percent lower at 3,508.
Wall Street聽was poised for a flat opening too, with聽Dow聽futures and the broader S&P 500 futures up a modest 0.2 percent.
The main piece of economic data out of the聽U.S.聽later will likely center on the housing market with new starts and existing home sales figures due.
Adam Cole, an analyst at聽RBC Capital Markets, said the figures are "likely to continue the picture of very moderate trend improvement."
Earlier in Asia, stocks were generally fairly buoyant after the聽Bank聽of聽Japan'蝉听easing announcement.
Hong Kong's Hang Seng climbed 1.2 percent to 20,841.91 and聽Australia'蝉听S&P/ASX 200聽added 0.5 percent to 4,418.40.聽South Korea's Kospi gained 0.2 percent to 2,007.88. The聽Shanghai Composite Index聽rose for the sixth straight trading day, up 0.4 percent to 2,067.83. The聽Shenzhen聽Composite Index gained 0.7 percent to 865.73.
In the currency markets, the聽Bank聽of聽Japan'蝉听announcement had little impact. The聽dollar聽was up only around 0.1 percent on the day at 78.93 yen. Meanwhile, the euro was more or less flat around $1.30. The euro has enjoyed a stellar few weeks as concerns over Europe's debt crisis have eased somewhat, largely on the back of a new bond-buying plan from the European Central聽Bank.
In the oil markets the benchmark聽New York聽rate was down 37 cents at $94.92 per barrel in electronic trading on the聽New York Mercantile Exchange.