BoJ’s Unexpected Rate Cut Spurred Global Markets

BoJ’s Unexpected Rate Cut Spurred Global Markets

The Asian markets were in the upward swing after Bank of Japan did the unexpected. The Bank slashed interest rate to minus 0.01 and assured of more such cuts if seen necessary. The news triggered a rally across major Asian indices on the last trading day of the month. China’s Shanghai SE Composite Index gained the most, up by 3.09% or 81.94 to 2,737.60. Hang Seng and Nikkei 25 finished the day by over 2.50% higher at 19,707.16 and 17,518.30 respectively. Taiwan’s TSEC 50 closed 2.22% higher at 8,080.60.

Oil and the U.S. market

Meanwhile, a minor uptick in oil prices and rally in the U.S. markets during the previous day is keeping the European markets in green. Nearly all of the major European indices are trading up by more than 1%.  Switzerland’s Swiss Market Index inched up by 1.46% to 8,272.42, followed by 1.28% gains posted by Germany’s DAX. FTSE 100 and CAC 40 are up by 1.23% and 1.15% respectively. Euronext 100 has so far added 9.62 points or 1.13% to trade near 862.47 level.

The U.S. markets remained buoyant yesterday as the surge in oil prices and better-than-expected earnings from Facebook Inc (NASDAQ:FB)  helped shrug off economic growth concerns. Dow Jones Industrial Average closed the day higher by triple digits, i.e., 125.18 points or 0.79% up at 16,069.64. S&P 500 Index added 0.55% to 1,893.36 during the session.

Growth remains sluggish

The optimism came despite disappointing Durable Goods data released yesterday, which declined by 1.5%, higher than the expectations of below 1% decline. Weekly jobless claims data for the week ended January 22, 2016, stood at 278,000. Pending home sales in December grew by 0.1%. The mixed data have been feeding the expectations that the Federal Reserve will not implement monetary tightening measures as aggressively as it projected.

Up ahead in the day, the market participants will look forward to fourth-quarter GDP numbers alongside international trade and employment cost index reading.