The yen fell and Japanese stocks rose Tuesday after the Bank of Japan raised interest rates, but shares were mixed elsewhere as investors awaited further signals from other central banks.
US stock markets opened mostly lower, Paris and Frankfurt were slightly higher in midday trading, and London was little changed.
The Bank of Japan hiked rates for the first time in 17 years, moving them out of negative territory, but indicated it was unlikely to raise borrowing costs again in the near term.
The announcement cheered Japanese stock market investors but the yen fell more than one percent against the dollar to 150.54 yen at 1330 GMT.
Rising prices and wages had finally given the BoJ space to pivot from a policy that has been an outlier in the global economy, where other countries have ramped up borrowing costs to combat inflation.
The bank’s move “had a ‘dovish hike’ written all over it and the yen slumped across the board, most notably against the US dollar,” said Fawad Razaqzada, annalyst at FOREX.com.
Several other major central banks this week hold gatherings that will decide on interest rates, including the United States and Britain. Australia kept its rates unchanged Tuesday.
“Investors are likely to sit on their hands now during the two-day Fed meeting which ends tomorrow,” said David Morrison, analyst at Trade Nation.
While the Fed is forecast to keep rates on hold at a two-decade high, it will release its “dot plot” outlook for the rest of the year.
“The concern is that, following last week’s disappointing inflation releases, the Fed may indicate that it is pushing out further the timing of its first rate cut since March 2020…and also revise downward its projections for how many cuts we may see this year,” Morrison said.
Nvidia shares were down two percent as its AI conference has not yet produced anything to drive the chipmaker beyond the more than 80 percent gain it has enjoyed since the start of the year.
In London, Unilever was up three percent after announcing plans to spin off its ice cream operations and slash thousands of jobs.
German investor confidence surged more than expected in March, a key survey showed Tuesday, on growing expectations that the European Central Bank will start cutting interest rates soon, helping to lift continental shares.
– Key figures around 1340 GMT –
New York – Dow: UP 0.1 percent at 38,844.71
New York – S&P 500: DOWN 0.3 percent at 5,132.34
New York – Nasdaq Composite: DOWN 0.8 percent at 15,967.43
London – FTSE 100: UP 0.1 percent at 7,730.49 points
Paris – CAC 40: UP 0.5 percent at 8,190.92
Frankfurt – DAX: UP 0.2 percent at 17,963.01
EURO STOXX 50: UP 0.2 percent at 4,994.61
Tokyo – Nikkei 225: UP 0.7 percent at 40,003.60 (close)
Hong Kong – Hang Seng Index: DOWN 1.2 percent at 16,529.48 (close)
Shanghai – Composite: DOWN 0.7 percent at 3,062.76 (close)
Dollar/yen: UP at 150.54 yen from 149.16 yen on Monday
Euro/dollar: DOWN at $1.0843 from $1.0873
Pound/dollar: DOWN at $1.2678 from $1.2727
Euro/pound: UP at 85.48 pence from 85.42 pence
West Texas Intermediate: UP 0.2 percent at $82.89 per barrel
Brent North Sea Crude: UP 0.1 percent at $87.01 per barrel
dan-gv/lth
