Following hard on the heels of a surprise interest rate increase from the Banco Central do Brasil, which sparked a huge rally in Sao Paulo, today the Bank of Japan expanded its promise of purchases of Japanese Government Bonds to 80 trillion yen ($727 billion), an increase of 30 trillion yen. The Government Pension Fund will increase its allocation to stocks to 50%
Slower than expected growth in Japan? A plunge in Chinese exports? The Russian occupation of the Crimea and worries about the dismemberment of the Ukraine? The Standard & Poor’s 500 has pulled back from record highs but we’re not talking about a big plunge here. As of 2:30 p.m. New York time today the S&P 500 was down just 0.42% to 1869.
Is it a case of too much news from Asia? With the negatives and positives canceling each other out? Certainly the news items individually are big enough to have moved Asian markets, even global markets, more than we’ve seen in the last two days.
Get used to it: The trend for the next few weeks looks like lots of news but no discernable direction for the global economy or financial markets.
With Japanese GDP growth unexpectedly slowing to an annual 1% rate in the fourth quarter and with the Japanese consumer facing an increase in the national sales tax to 8% from 5% in April, Japan’s central bank today extended its unlimited loan program for another year
Disappointment over weaker than expected GDP growth in Japan for the fourth quarter was overshadowed by faster than expected lending growth in China.
When we checked in with the global economy last week, the numbers had raised questions about growth in developed economies. A pick up in growth in the world’s developed economies is supposed to offset a dip in growth in the developing world in 2014.
Japanese Prime Minister Shinzo Abe disappointed today. He was supposed to pull another rabbit out of his hat—but today’s speech not only didn’t deliver a rabbit, but it also barely showed the hat. Abe’s speech had been billed as the next stage—Stage 3–in his plan to revive the Japanese economy.
