HONG KONG (AP) – World shares advanced yesterday after United States (US) stocks rose to a record and the Bank of Japan (BOJ) raised its key lending rate.
Oil prices fell after United States (US) President Donald Trump called on oil-producing countries to reduce the price of crude, which would ease worries about inflation.
Markets showed little obvious reaction to Trump’s most recent comments about imposing higher tariffs on products from China and other countries.
France’s CAC 40 rose 0.9 per cent in early trading to 7,960.60, while Germany’s DAX added 0.3 per cent to 21,478.43. Britain’s FTSE 100 was nearly unchanged at 8,563.49. The futures for the S&P 500 and the Dow Jones Industrial Average edged 0.1 per cent lower.
In Asian trading, Tokyo’s Nikkei 225 index lost less than 0.1 per cent to 39,931.98 after the central bank raised its benchmark rate to about 0.5 per cent from 0.25 per cent, as widely expected. It is the highest level for the rate since 2008, as the BOJ shifts out of a long spell of extreme low interest rates meant to spur more borrowing and spending.
A stronger yen tends to make profits weaker when overseas revenues are converted into yen. Shares in export manufacturers fell as the US dollar dropped against the Japanese yen, trading at JPY155.22, down from 156.06 yen. Toyota Motor Corp’s shares fell 1.5 per cent, Nissan Motor Corp lost 2.5 per cent and Honda Motor Co was down 0.8 per cent.
Just before the BOJ’s decision, statistics from the government showed the core inflation rate increased to three per cent year-on-year in December, reaching the highest level in 16 months and above the central bank’s two per cent target.
The Hang Seng in Hong Kong added 1.9 per cent to 20,066.19 and the Shanghai Composite index rose 0.7 per cent to 3,252.63. In South Korea, the Kospi gained 0.9 per cent to 2,536.80. Australia’s S&P/ASX 200 advanced 0.4 per cent to 8,408.90.
On Thursday, the S&P 500 climbed 0.5 per cent to 6,118.71, surpassing its record set early last month. It was the seventh gain in eight days for the main measure of Wall Street’s health.
The Dow Jones Industrial Average piled on 0.9 per cent, while the Nasdaq composite added 0.2 per cent.
The gains came amid relatively calm moves for Treasury yields in the US bond market.
Big swings there in recent months have been shaking the stock market, particularly when rising worries about inflation and the US government’s heavy debt send Treasury yields higher.
Treasury yields took a brief turn upward after Trump began talking about the prospect of tariffs in a speech by video at the World Economic Forum, saying products made outside of the US will be subject to a tariff, but they pulled back after he gave few details. The yield on the 10-year Treasury climbed to 4.64 per cent from 4.61 per cent late Wednesday, though it remains below its high from earlier this month.
The two-year Treasury yield eased to 4.29 per cent from 4.30 per cent late Wednesday.
Yields on Thursday had held relatively steady after a report showed slightly more US workers applied for unemployment benefits last week than economists expected.
Traders don’t expect the report to push the Federal Reserve (Fed) to cut its main interest rate at its upcoming meeting next week, according to data from CME Group.
If they’re correct, it would be the first meeting since September where the Fed hasn’t lowered the federal funds rate to take pressure off the US economy.
Lower rates can goose prices for investments, but they can also give inflation more fuel.
In the cryptocurrency market, where prices have surged on hopes President Trump will make Washington friendlier to the industry, bitcoin fell below USD103,000, according to CoinDesk.
It had set a record above USD109,000 on Monday.
In other dealings yesterday, US benchmark crude oil shed nine cents to USD74.53 per barrel.
Brent crude, the international standard, was unchanged at USD78.29 per barrel.
The euro rose to USD1.0495 from USD1.0416.
