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Wall Street edged lower early Tuesday in what has been a critical week for central banks around the world.
S&P 500 futures were down 0.4% and Dow Jones Industrial Average futures were down 0.2% before the bell, the day before the Federal Reserve’s latest policy announcement.
The Fed’s interest rate-setting meeting begins on Tuesday and ends on Wednesday, during which the central bank is widely expected to 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.
Also on Tuesday, the Bank of Japan raised its base interest rate for the first time in 17 years, ending its long-standing 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 150.36 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.
In stock trading on Tuesday, Unilever rose 3% after announcing it would spin off its Ben & Jerry’s ice cream business and cut 7,500 jobs.
Bitcoin fell again on Tuesday, dropping another 8% to just above $63,000. Since its peak of over $73,000 last Wednesday, the original cryptocurrency has lost nearly 14% of its value. Most other cryptocurrencies also fell.
Germany’s DAX rose about 0.1% and Paris’ CAC40 rose 0.2%. London’s FTSE 100 index was down about 0.2% as of midday.
Troubled real estate developer China Evergrande Group has been accused by China’s market watchdog of misrepresenting its profits and other violations as it carries out a major cleanup of its troubled financial sector. The company announced that it had been fined 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, remains above the Reserve Bank of Australia’s target.
In other trading early Tuesday, benchmark U.S. crude oil fell 8 cents to $82.08 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 7 cents to $86.82 a barrel.
The euro fell from $1.0872 to $1.0851.
On Monday, the S&P 500 rose 0.6%, breaking 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%.
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