World shares mostly higher after slight gains on Wall St
, world shares are mostly higher.
BANGKOK — European share prices were higher Wednesday due to a mixed session in Asia, which was void of major data releases.
Germany’s DAX rose 0.7% to 13,987. 59 while the CAC 40 in Paris jumped 1% to 6,514.30. Britain’s FTSE 100 gained 0.5% to 7,407.92.
The future for the S&P 500 advanced 0.7%, while the Dow Jones Industrial Average surged 0.8%.
Tokyo’s benchmark Nikkei 225 index slipped 0.7%, to 26,387. 72, a day after the Bank of Japan gave in to pressure on the yen by expanding the cap on the yield of the 10-year Japanese government bond to 0.50%. It had been 0.25%.
On Tuesday, the Nikkei 225 lost 2.5%.
The Japanese central bank has maintained its key lending rate at minus 0.1% over the years in an effort to stimulate growth and keep credit extremely cheap. The world markets were rattled Tuesday by a slight change in the stance of the Japanese central bank against raising interest rates to reduce inflation. Bond yields pushed higher.
Higher yields mean borrowing is more expensive and slow down the economy. This can reduce upward pressure on prices but also lowers the prices of stocks and other investments. The widening gap between BOJ’s benchmark interest rate and rising U.S. interest rates has caused the yen to weaken against other currencies and the U.S. dollar. This has led to a surge in imports, consumer goods, and industrial inputs, and added pressures on the BOJ’s economy.
“Ultimately, the BOJ is reacting to a dysfunctioning bond market and a weakening yen. The move also marks the end of one of the most prominent central banks that has remained neutral on ultra-low rates,” Stephen Innes, of SPI Asset Management stated in a commentary.
Central banks around the globe have been increasing rates at an alarming pace and many economists and investors believe that a recession is imminent in 2023. The Federal Reserve and the European Central Bank have both pledged to continue raising rates until next year in order to control inflation.
At the same time, fresh waves of COVID-19 infections in China, Japan and other countries are casting a shadow over pandemic recoveries.
In other Asian trading, Hong Kong’s Hang Seng gained 0.3% to 19,160. 49 and the Shanghai Composite index slipped 0.2% to 3,068.41.
South Korea’s Kospi lost 0.2% to 2,328.95. In Sydney, the S&P/ASX 200 gained 1.3% to 7,115.10. In Bangkok and Taiwan, shares rose while they fell in Mumbai.
On Tuesday, the S&P 500 rose 0.1%, while the Dow industrials rose 0.3%. The Nasdaq composite closed 0.1% lower, barely budging. The Russell 2000 index 0.5% was lifted by small company stocks, which outperformed the wider market.
The yield on the 10-year Treasury rose to 3. 70% from 3. 59% late Monday. This yield is used to set mortgage rates and other economy-setting loans. It has already caused pain in the U.S. housing sector. The two-year U.S. Treasury yield was less predictable than the Federal Reserve’s expectations. It held steady at 4.26%.
In the foreign exchange market, the dollar rose to 131. 70 Japanese yen from 131. 62 yen. Tokyo’s surprise move on Tuesday pushed the dollar 4% lower against yen.
The euro fell to $1. 0615 from $1.0626.
U.S. benchmark crude oil gained 77 cents to $77. 00 per barrel in electronic trading on the New York Mercantile Exchange. It rose 1.2% Tuesday.
Brent crude, the pricing basis for international trading, picked up 85 cents to $80. 84 per barrel.
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