NEW YORK - Wall Street markets have surged more than two per cent after the Bank of Japan unexpectedly cut its interest rate to below zero and Microsoft led a major rally in technology shares, repairing some of the damage to the S&P 500's worst January since 2009. The S&P 500 rose 2.48 per cent on Friday, its strongest day since September. "Sentiment certainly had swung to a wildly negative scenario. In the short term I'm not sure the sentiment backdrop we've seen was warranted," said Michael Church, president of Addison Capital Management in Philadelphia.
"What happens if there is not a recession? What happens if China stabilises and the Fed doesn't raise rates aggressively?" Global equities got a surprise boost on Friday when the BoJ cut a benchmark rate below zero to stimulate its economy. Stocks were also lifted by weak fourth-quarter US gross domestic product growth data, which bolstered arguments that the Federal Reserve might go slower than expected on future rate hikes.
The Dow Jones industrial average ended 2.47 per cent higher at 16,466.30 while the S&P 500 gained 46.88 points or 2.48 per cent higher to end at 1,940.24. The Nasdaq Composite surged 2.38 per cent to 4,613.95.
LONDON - Britain's benchmark equity index rose, cheered by the Bank of Japan's decision to adopt negative interest rates to boost its economy.
The blue-chip FTSE 100 index, which had fallen around one per cent on Thursday, closed 2.6 per cent higher at 6,083.79 points. "The Bank of Japan has managed to temporarily ease some of the macroeconomic tensions that have plagued the start to 2016," said Spreadex analyst Connor Campbell.
Traders said that the Bank of Japan's move would put pressure on the US Federal Reserve to adopt a cautious stance over any future interest rate rises. It could also prompt the ECB to undertake similar measures in March and reinforce the likelihood that the Bank of England would keep interest rates at a record low. The index finished January down 2.5 per cent for the month, its biggest monthly fall since September.
HONG KONG - World shares jumped and the yen slumped after the Bank of Japan stunned markets by taking one of its main interest rates into negative territory, its boldest step yet to re-inflate the economy. "It has become clear that stock markets cannot stand on their own feet," said KBC senior economist Koen De Leus, in Brussels.
"As long as the economy is shaky and the world is burdened with high debt, central banks and their money printing machines are a necessary evil to keep up the markets." Japan's Nikkei share index whipsawed on the BOJ announcement before ending up 2.8 per cent, to mark a 3.3 per cent weekly gain. The central bank's move gave a lift to bourses across the region, even though economists at HSBC and elsewhere doubted it would give a boost to Japan's real economy or inflation. "We do not think negative rates are a game changer," said Commerzbank strategist Esther Reichelt, in Frankfurt.
"Pressure on the BoJ will mount to do even more in coming months to attain their inflation target." MSCI's broadest index of Asia-Pacific shares outside Japan added 1.8 per cent, up 2.7 per cent for the week . The Shanghai Composite Index rose 2.9 per cent, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen added 3.2 per cent, bouncing from steep losses early in the week.
WELLINGTON - The S&P/NZX 50 Index rose 20.52 points, or 0.3 per cent, to 6170.22.
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