Global markets continued their shakedown on Wednesday with Asian stocks falling to six-week lows on trader concern that central banks won’t be able to sufficiently stimulate economic growth. An article in the Nikkei newspaper on Wednesday signaled that the Bank of Japan plans to implement a monetary easing policy which will include a highly contentious negative interest rate policy. The BOJ is poised for a two-day policy meeting next week.
Ric Spooner, chief market analyst for CMC Markets, wrote in a note to the company’s traders that the markets were reacting to "a growing impression that the European Central Bank (ECB) and Bank of Japan (BOJ) are unlikely to add significantly to current stimulus plans, while the U.S. Fed will gradually move to lift rates."
Market Moves
The euro dipped slightly during Wednesday’s Asian session to $1.12200, while the yen also had a slight decline against the U.S. dollar, falling to 102.99. The continued expectation of a U.S. interest rate hike helped to keep the dollar in place. In Tuesday’s U.S. session the S&P 500 index fell to a two-month low, down 1.48 percent, holding steady near its 200 day moving average but not yet breaching it.
Crude oil prices rose slightly after a three percent drop in the prior session. Brent was up slightly to $47.25 per barrel. The U.S. Treasury note was at 1.7358 compared to last week’s rate of 1.540.