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BANGKOK — World shares are mixed after the Bank of Japan hiked its benchmark interest rate for the first time in 17 years, ending a longstanding negative rate policy.
The BOJ’s decision to raise the overnight call rate to a range of 0 to 0.1%, up from minus 0.1% drew only a muted reaction in markets.
Tokyo’s Nikkei 225 index rose 0.7% to 40,003.60, while the dollar rose to 150.62 Japanese yen from 149.14 yen.
The Japanese central bank said wage increases and other indicators suggested that inflation had stabilized above the BOJ’s 2% target, but noted “extremely high uncertainties,” including weakness in industrial production, exports, housing investment and government spending.
Analysts said the move was calibrated to extricate the BOJ from the extreme policies it has been using without aggressively tightening credit.
“We anticipate the BOJ will maintain an effective zero-interest rate policy at least for another year,” Shigeto Nagai of Oxford Economics said in a commentary.
This week’s highlight for markets will likely be the Federal Reserve’s meeting on interest rates, which ends on Wednesday. The widespread expectation is that the central bank will keep its main interest rate steady at its highest level since 2001.
But Fed officials will also give updated forecasts for where they see interest rates heading this year and in the long run. They earlier had penciled in three cuts to rates this year, which would relieve pressure on the economy and financial system.
Across the Atlantic, the Bank of England will announce its latest decision on interest rates later in the week.
Germany’s DAX rose 0.2% to 17,961.40 and the CAC 40 in Paris also gained nearly 0.2%, to 8,162.18. London’s FTSE 100 edged less than 0.1% lower, to 7,718.80.
The futures for the S&P 500 and the Dow Jones Industrial Average were both 0.2% lower.
Also Tuesday, troubled property developer China Evergrande Group, announced that Beijing’s market watchdog had fined it 4.2 billion yuan ($333.4 million) for allegedly falsifying its revenue, among other violations, as it conducts a deep clean of the troubled financial sector.
The company said in a release to mainland Chinese stock exchanges late Monday that its chairman, Hui Ka Yan, was fined 47 million yuan ($6.5 million) and banned from China’s markets for life. Hui, also known as Xu Jiayin, was detained by authorities in September for suspected “illegal crimes.”
Chinese markets fell, pulled lower by heavy selling of property shares. Hong Kong’s Hang Seng index lost 1.2% to 16,529.48, while the Shanghai Composite index dropped 0.7% to 3,062.76.
Evergrande lost the maximum 10% daily limit, while China Vanke Co., another major developer now facing its own troubles, lost 5.6%. Sino Ocean Group holding declined 4.9% and Country Garden Holdings shed 5.4%.
In Seoul, the Kospi fell 1.1% to 2,656.17, while Australia’s S&P/ASX 200 added 0.4% to 7,703.20 after the central bank kept its benchmark interest rate steady at 4.35% for a third consecutive meeting. The widely expected decision reflected the fact that inflation is cooling but still above the Reserve Bank of Australia’s target.
The S&P 500 added 0.6% on Monday, coming off its first back-to-back weekly losses since October. The Dow Jones Industrial Average rose 0.2% and the Nasdaq composite gained 0.8%. Smaller stocks in the Russell 2000 index slipped 0.7%.
Recent reports on inflation have consistently been coming in worse than expected, though. That could force the Fed to trim how many rate cuts it foresees delivering this year, which would disappoint investors.
In other trading early Tuesday, U.S. benchmark crude oil shed 30 cents to $81.86 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, gave up 37 cents to $86.55 per barrel.
The euro slipped to $1.0844 from $1.0872.
