Japan leads global stocks higher after stimulus move

SEOUL, South Korea – Japan led global stock markets higher Friday after its central bank introduced a negative interest rate policy in the latest move to overcome malaise in the third-biggest economy. The yen dived against the dollar and the euro.

KEEPING SCORE: Britain’s FTSE 100 rose 1.2 per cent to 6,004.94 and France’s CAC 40 advanced 1.4 per cent to 4,382.73. Germany’s DAX climbed 1.3 per cent to 9,763.69. Futures indicated that Wall Street was set to extend gains. Dow futures added 1 per cent and S&P 500 futures climbed 1.1 per cent.

JAPAN RATE: The Bank of Japan said it is imposing a 0.1 per cent fee on some deposits left with the central bank, effectively a negative interest rate. It hopes that will encourage commercial banks to lend more, rather than keeping cash at the BOJ, and stimulate investment and growth. Latest data showed Japan’s core inflation rate was just 0.5 per cent in 2015 on low oil prices while consumer spending fell 4.4 per cent in December over a year earlier.

ANALYST’S TAKE: “Concerns had been mounting that the BOJ were increasingly tapped out in their ability to ease monetary policy,” Angus Nicholson, a market analyst at IG in Melbourne, Australia, said in a commentary. “The announcement opens the door to sustain further easing by the BOJ throughout the year.”

ASIA’S DAY: After gyrating between losses and gains, Japan’s Nikkei 225 finished up 2.8 per cent at 17,518.30. The policy decision is a possible boost for the economy but viewed by investors as negative for banks. Shares of Mitsubishi UFJ Financial Group fell 3.8 per cent. Hong Kong’s Hang Seng gained 2.5 per cent to 19,683.11 and the Shanghai Composite in mainland China rose 3.1 per cent to 2,737.60. Australia’s S&P/ASX 200 added 0.6 per cent to 5,005.50 while South Korea’s Kospi closed up 0.3 per cent at 1,912.06. Stocks rose in Taiwan, India and Southeast Asia.

ENERGY TALK: The Kremlin said on Thursday it is actively discussing the instability of oil markets with the world’s key producers. Even though Russia said there was no concrete plan for a co-ordinated cut in production, it was enough to push the price of oil higher. Investors hope that talks could lead to production cuts that would begin to alleviate a global supply glut.

OIL PRICE: Benchmark U.S. crude was up 35 cents to $33.57 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 92 cents, or 2.8 per cent to close at $33.22 a barrel on Thursday. Brent crude, a benchmark for international oils, gained 38 cents to $35.18.

CURRENCIES: The dollar jumped to 120.85 yen from 118.84 yen the previous day. The euro weakened to $1.0911 from $1.0932 but against the Japanese currency rose to 131.87 yen from 129.92 yen.