Thursday Morning Cheat Sheet: 3 Stories Moving Markets
The markets were mixed in Asia on Thursday. Japan’s Nikkei climbed 2.2 percent after the nation’s central bank unveiled an unexpectedly aggressive economic stimulus plan. The Hang Seng edged down 0.14 percent, while the S&P/ASX 200 was off 0.89 percent.
European markets were also a mixed bag on Thursday morning. London’s FTSE 100 was off 0.20 percent following news that the Bank of England would keep interest rates at a record low of 0.5 percent and to make no change to its asset-purchasing program. Germany’s DAX was up 0.56 percent while the STOXX 50 was up 1.01 percent as New York headed into its opening bell.
U.S. futures at 8:40 a.m.: DJIA: +0.24%, S&P 500: +0.34%, NASDAQ: +0.40%.
Here are three stories to keep an eye on:
1) “This is an unprecedented degree of monetary easing,” Haruhiko Kuroda, Governor of the Bank of Japan, said at a news conference after his first policy meeting as head of the central bank. Reportedly smiling as he delivered the news, Haruhiko shocked global markets and sent the yen crashing to trade at 95.4695 to the dollar after he unveiled one of the most aggressive monetary easing programs in the world.
In order to meet a recently-established inflation rate of 2 percent and turn around long-term stagflation, Kuroda pushed the Bank of Japan to double its holding of government bonds and exchange-traded funds in just two years. The program amounts to $1.4 trillion in stimulus for the nation’s beleaguered economy, with 7 trillion yen ($75 billion) in long-term purchases per month.
2) The European Central Bank left the benchmark interest rate unchanged at a record low of 0.75 percent following a meeting in Frankfurt on Thursday. Like the last several meetings that the ECB has held to discuss the benchmark rate, it was widely expected that no change would be made. Even with the near crisis in Cyprus rattling markets and shaking the dust off of controversial policies, 54 out of 56 economists polled by Bloomberg forecast that the rate would remain the same.
However, officials with knowledge of the matter tell the publication that with economic growth uncertain across the European Union, policymakers are considering a change of strategy for the second half of 2013. These discussions include possibly lowering the rate and a new round of long-term loans to banks as a means to encourage lending.
The Bank of England also decided to keep its benchmark rate unchanged at a record low of 0.5 percent, and did not make any edits to its asset-purchase program.
3) The “Eurozon downturn intensifies,” begins a report from Markit released on Thursday morning. The final Markit Eurozone PMI Composite Output Index, which includes the service sector, registered 46.5 in March, down from 47.9 in February. The services index fell from 47.9 to 46.4. Any reading below 50 indicates contraction.
Chris Williamson, chief economist at Markit, commented: “The drop in business activity in March rounds off another quarter of decline. While the first quarter contraction is likely to have been less steep than the 0.6 percent decline seen in the final quarter of last year, the concern is that the Eurozone downturn shows no signs of ending.”
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