AP – Global markets were mostly lower and Japan’s stock index tumbled yesterday as the US dollar sank against the yen after the head of the Federal Reserve (Fed) suggested a cut to interest rates will come soon.
France’s CAC 40 slid 1.3 per cent in early trading to 7,433.71. Germany’s DAX declined 1.3 per cent to 18,275.40, while Britain’s FTSE 100 fell 0.3 per cent to 8,347.45.
The future for the S&P 500 edged 0.1 per cent higher while that for the Dow industrials fell 0.1 per cent. Central bank movements remained in the spotlight after the Bank of Japan raised its benchmark rate a day earlier and the Fed kept its key rate unchanged.
Economists were divided on whether the Bank of England would cut its main interest rate yesterday by a quarter-point from the current 16-year high of 5.25 per cent, or hold off off until September.
Inflation has reached the central bank’s target of two per cent, but some members of its policymaking panel have voiced concerns about persistent price pressures in the services sector, which accounts for around 80 per cent of the British economy.
In Asian trading, the Nikkei 225 in Tokyo sank more than 1,000 points earlier in the day and ended trading down 2.5 per cent at 38,126.33.
A stronger yen increases the purchasing power of Japanese homes and businesses but hurts the profits of exporters like Toyota by eroding the value of their overseas earnings.
Hong Kong’s Hang Seng slipped 0.2 per cent to 17,304.96, while the Shanghai Composite lost 0.2 per cent to 2,932.39.
Australia’s S&P/ASX 200 edged up 0.3 per cent to 8,114.70, while South Korea’s Kospi rose 0.3 per cent to 2,777.68.
In currency trading, the US dollar fell to JPY149.67 from JPY149.98.
The euro cost USD1.0815, little changed from USD1.0830. The dollar had been trading at JPY160 levels several weeks ago. But that reversed course as anticipation grew for a Bank of Japan rate cut, which came on Wednesday.
Toyota’s shares sank 8.5 per cent, while Nintendo’s fell 3.4 per cent and Sony’s lost 3.3 per cent.
Analysts said indications from the Fed were that rate cuts were coming.
