Global markets lower as BOJ stands pat; yen jumps vs dollar
MANILA, Philippines - Global stocks were mostly lower Thursday and Tokyo's benchmark dropped as the yen surged against the U.S. dollar after the Bank of Japan chose to keep its monetary easing policies unchanged. With the BOJ and Federal Reserve policy meetings over, attention was shifting to the June 23 "Brexit" vote on Britain's status within the European Union.
Britain's FTSE 100 slipped 0.7 percent to 5,922.78 in early trading. Germany's DAX fell 0.9 percent to 9,525.17. France's CAC 40 was down 1.0 percent to 4,132.34.
U.S. futures indicate a tepid start on Wall Street, with Dow futures off 0.4 percent and S&P futures down 0.5 percent.
Japan's central bank once again foiled speculation it might further ease monetary policy to help the faltering recovery. The Bank of Japan is pumping about 80 trillion yen (about $769 billion) into the economy each year with purchases of Japanese government bonds and other assets. Meanwhile, Japanese officials warned they may have to intervene if the yen jumps too much. A stronger yen, which hurts profits of exporters, tends to pull share prices lower.
The Federal Reserve said Wednesday it was keeping interest rates unchanged in light of an uncertain job market, offering no hints of when its next rate hike might occur. With the jobs situation and Britain's status obscuring the outlook, the Fed said in a statement that it needs a clearer economic picture before resuming the rate hikes it began in December.
"The Bank of Japan also left policy unchanged again today, also putting themselves in the 'wait and see' camp and subsequently directing a wave of capital into the Japanese yen and out of Japanese equities," Chris Weston of IG said in a commentary.
Japan's Nikkei 225 fell 3.1 percent to 15,434.14. Hong Kong's Hang Seng index sank 2.1 percent to 20,038.13. China's Shanghai Composite Index was down 0.5 percent at 2,872.82. Australia's S&P ASX 200 was nearly flat at 5,146.00 and South Korea's KOSPI slid 0.9 percent at 1,951.99. The Philippines Stock Exchange index closed 0.8 percent up, while other Southeast Asian bourses were lower.
U.S. crude lost 66 cents at $47.35 a barrel in electronic trading on the New York Mercantile Exchange. It fell 48 cents and closed at $48.01 on Wednesday. Brent crude, used to price international oils, shed 73 cents at $48.24. Its price fell 86 cents on Wednesday, when it closed at $48.97 a barrel in London.
The dollar fell to 104.10 yen from 105.98 the previous day. The euro lost early gains and was down to $1.1262 from $1.1268.