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BANGKOK (AP) – Global stocks are mixed after the Bank of Japan raised its benchmark interest rate for the first time in 17 years, ending years of negative interest rate policy.
The Bank of Japan’s decision to raise the overnight call rate from -0.1% to a range of 0-0.1% received only a mild market reaction.
Tokyo’s Nikkei 225 index rose 0.7% to 40,003.60 yen, while the dollar rose to 150.62 yen from 149.14 yen.
Japan’s central bank said wage growth and other indicators suggest inflation is stable above the Bank of Japan’s 2% target, but industrial production, exports, housing investment and government spending are slowing. “There is an extremely high degree of uncertainty,” including the weakness of the economy.
Analysts said the measures were tailored to free the Bank of Japan from the extreme policies it has pursued without aggressive credit tightening.
“We expect the Bank of Japan to maintain its de facto zero interest rate policy for at least another year,” Shigeto Nagai of Oxford Economics said in a commentary.
The highlight of the week for markets will be the US Federal Reserve’s interest rate meeting, which concludes on Wednesday. There are widespread expectations that the central bank will keep its key interest rate unchanged at the highest level since 2001.
But Fed officials are also expected to release updated projections about where they see interest rates heading this year and over the long term. The government had earlier decided to cut interest rates three times this year to ease pressure on the economy and financial system.
Across the Atlantic, the Bank of England is expected to announce its latest decision on interest rates later this week.
Germany’s DAX rose 0.2% to 17,961.40, while Paris’ CAC40 rose nearly 0.2% to 8,162.18. London’s FTSE 100 index fell less than 0.1% to 7,718.80.
Futures for the S&P 500 and the Dow Jones Industrial Average both fell 0.2%.
Also on Tuesday, troubled real estate developer China Evergrande Group was accused of misrepresenting its revenue and other violations as it carries out a major cleanup of its troubled financial sector. market watchdog announced that it had fined the company 4.2 billion yuan ($333.4 million).
The company said in a release to mainland Chinese stock exchanges late Monday that its chairman, Hui Ker Yang, had been fined 47 million yuan ($6.5 million) and permanently banned from the Chinese market. Hui, also known as Xu Jiayin, was detained by authorities in September on suspicion of “illegal crimes.”
The Chinese market fell due to heavy selling in real estate stocks. Hong Kong’s Hang Seng Index fell 1.2% to 16,529.48, and the Shanghai Composite Index fell 0.7% to 3,062.76.
Evergrande lost its daily cap of 10%, and China Vanke Co., another major developer currently facing financial difficulties, lost 5.6%. Sino Ocean Group Holdings fell 4.9% and Country Garden Holdings fell 5.4%.
In Seoul, the Kospi fell 1.1% to 2,656.17 after the central bank kept the benchmark interest rate unchanged at 4.35% for the third consecutive meeting, while Australia’s S&P/Australian Stock Exchange 200 index rose 0.4%. The total amount was 7,703.20. The widely anticipated decision reflected the fact that inflation, although slowing, remained above the Reserve Bank of Australia’s target.
The S&P 500 rose 0.6% on Monday, snapping a streak of weekly losses for the first time since October. The Dow Jones Industrial Average rose 0.2% and the Nasdaq Composite rose 0.8%. Small-cap stocks in the Russell 2000 index fell 0.7%.
However, recent reports on inflation have consistently been worse than expected. That could force the Fed to reduce the number of interest rate cuts this year, disappointing investors.
In other trading early Tuesday, benchmark U.S. crude oil fell 30 cents to $81.86 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 37 cents to $86.55 a barrel.
The euro fell from $1.0872 to $1.0844.
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