Global shares mixed, yen weakens as Japan's central bank stands pat


Global shares were mixed on Friday after Wall Street touched fresh records, with benchmarks pushed higher by the frenzy over artificial-intelligence technology.

France's CAC 40 dropped 1.3% in early trading to 7,606.73 while Germany's DAX dipped 0.5% to 18,174.98. Britain's FTSE 100 fell 0.2% to 8,143.79. The future for the Dow Jones Industrial Average slipped 0.5% and that for the S&P 500 was 0.2% lower.

In Asian trading, Japan's benchmark Nikkei 225 gained after the Bank of Japan kept its monetary policy intact, finishing up 0.2% at 38,814.56, though the central bank did say it intends to begin reducing its government bond purchases as it eases itself out of its ultra-lax stance.

"Even if the BOJ wants to convey that the direction of travel is for tightening, the key guiding principle is gradualism," Tan Jing Yi at Mizuho Bank said in a commentary. "Fact is, underlying economic confidence is at best fragile if not fraught."

The central bank said details on reducing its massive bond holdings, acquired as the BOJ pumped trillions of dollars into the economy, would be decided and start after its next meeting in July. That helped send the Japanese yen lower against the dollar. The dollar has risen from a rate of about 140 yen to above 157 yen over the past year.

Early Friday, the U.S. dollar was trading at 157.62 Japanese yen, up from 157.02 yen. The euro cost $1.0709, down from $1.0739.

Elsewhere in Asia, Australia's S&P/ASX 200 fell 0.3% to 7,724.30. South Korea's Kospi edged up 0.1% to 2,758.42. Hong Kong's Hang Seng slipped 0.9% to 17,941.78, while the Shanghai Composite rose 0.1% to 3,032.63.

An update on U.S. inflation Thursday showed prices paid at the wholesale level weren't as bad as economists expected. They actually dropped from April into May, when economists were forecasting a rise.

The S&P 500 added 0.2% to its all-time high set the day before and the Nasdaq composite climbed 0.3% from its own record. The Dow Jones Industrial Average fell 0.2%.

High interest rates have been dragging on some parts of the economy, particularly manufacturing. A separate report on Thursday showed more U.S. workers filed for unemployment benefits last week than economists expected, though the number is still low relative to history.

The hope on Wall Street is that growth for the job market and economy will continue to slow, taking pressure off inflation, but not so much that it precipitates a deep recession.

Most Fed officials are penciling in either one or two cuts to interest rates this year, and traders are hopeful they can begin as soon as September.

In energy trading, benchmark U.S. crude shed 58 cents to $78.04 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost 47 cents to $82.28 a barrel.

Comments 3
Thumb chrisrushlau 16 June 2024, 19:27

The Bank of Japan unanimously maintained its key short-term interest rate at around 0% to 0.1% at its June meeting, as widely expected, after delivering the first rate hike since 2007 and ending its eight years of negative rates in March. At the same time, the board indicated that it may consider how to start reducing bond purchases at its July meeting. The move was passed by an 8-1 majority vote, with board member Nakamura Toyoaki dissenting, aiming to allow long-term rates to move more freely. The BoJ currently purchases about JPY 6 trillion in bonds per month.

Thumb chrisrushlau 16 June 2024, 19:28

Friday's statement mentioned that Japan's economy had recovered moderately despite fragility in some areas. Private consumption was resilient amid improving corporate profits and business spending. Exports, however, have been flat, as did public investment. On inflation, the yoy figures have been in the range of 2 to 2.5%, with inflation expectations rising modestly. Meanwhile, underlying CPI is expected to increase gradually. source: Bank of Japan

Thumb chrisrushlau 16 June 2024, 19:28

"Yoy" means "year on year".