Markets subdued by BoJ's modest stimulus but yen surges

AP News
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Posted: Jul 29, 2016 8:41 AM
Markets subdued by BoJ's modest stimulus but yen surges

LONDON (AP) — Stock markets around the world are ending the week on a flat note after the Bank of Japan disappointed investors with a smaller than anticipated stimulus. However, the yen surged following Friday's decision.

KEEPING SCORE: In Europe, Britain's FTSE 100 slipped 0.1 percent to 6,713 while Germany's DAX rose 0.3 percent to 10,305. France's CAC 40 was 0.1 percent higher at 4,423. Wall Street was poised for a subdued opening too with Dow futures and the broader S&P 500 futures down 0.1 percent.

JAPAN SURPRISE: Japan's central bank ended a policy meeting Friday by announcing it will expand purchases of exchange traded funds from financial institutions to help inject more cash into the world's third-largest economy and pursue its 2 percent inflation target. But the measures fell short of hopes for more aggressive action. That helped the yen surge in the currency markets as investors priced in fewer yen in circulation — the dollar was 2.1 percent lower at 103.03 yen.

ANALYST TAKE: "The fact that the BoJ undershot market expectations should come as no surprise given the lessons learnt from both the Bank of England and European Central Bank meetings this month," said Joshua Mahony, market analyst at IG. "The BoJ has used every weapon bar the helicopter and there is going to come a time when the BoJ takes stock to consider whether their policies are even making a difference."

EUROPE SLIPS: A run of economic data out of the 19-country eurozone did little to alter the underlying mood during European trading. Official figures showed growth across the region halved in the second quarter of the year to 0.3 percent. It also found inflation edged up modestly to 0.2 percent in the year to July and unemployment holding steady at 10.1 percent in June.

ASIA'S DAY: Japan's Nikkei 225 gained 0.6 percent to 16,569.27, recovering from earlier losses. Hong Kong's Hang Seng index fell 1.3 percent to 21,891.37. Australia's S&P ASX 200 rose 0.1 percent to 5,560.40. China's Shanghai Composite Index slipped 0.5

OIL: In the energy market, benchmark U.S. crude fell 42 to $40.72 on the New York Mercantile Exchange while Brent crude, used to price international oils, fell 75 cents to $42.95 in London.