Global markets drop as Bank of Japan stands pat on stimulus

MANILA, Philippines – Global stocks fell Thursday after the Bank of Japan kept its monetary policies unchanged and as investors turned their attention to next week’s “Brexit” vote on whether Britain should exit the European Union.

KEEPING SCORE: Britain’s FTSE 100 fell 0.7 per cent to 5,927 and Germany’s DAX dropped 0.9 per cent to 9,520. France’s CAC 40 was down 0.7 per cent to 4,143. U.S. futures indicate a tepid start on Wall Street, with Dow futures off 0.4 per cent and S&P futures down 0.5 per cent.

BANK OF JAPAN: Japan’s central bank once again foiled speculation it might further ease monetary policy to help the faltering recovery. The Bank of Japan is pumping about 80 trillion yen (about $769 billion) into the economy each year with purchases of Japanese government bonds and other assets. Meanwhile, Japanese officials warned they may have to intervene if the yen jumps too much. A stronger yen, which hurts profits of exporters, tends to pull share prices lower.

THE FED: The Federal Reserve said Wednesday it was keeping interest rates unchanged in light of an uncertain job market, offering no hints of when its next rate hike might occur. With the jobs situation and Britain’s status obscuring the outlook, the Fed said in a statement that it needs a clearer economic picture before resuming the rate hikes it began in December.

ANALYST’S VIEWPOINT: “The Bank of Japan also left policy unchanged again today, also putting themselves in the ‘wait and see’ camp and subsequently directing a wave of capital into the Japanese yen and out of Japanese equities,” Chris Weston of IG said in a commentary.

BREXIT OUTLOOK: Investors are bracing for a tight race in the British vote on June 23 on whether to leave the EU. The Bank of England, which kept its rates on hold as well on Thursday, said a vote to leave would likely see the pound drop sharply and hurt spending and investment. It also warned that the uncertainty could affect confidence in the global economy.

ASIA’S DAY: Japan’s Nikkei 225 fell 3.1 per cent to 15,434.14. Hong Kong’s Hang Seng index sank 2.1 per cent to 20,038.13. China’s Shanghai Composite Index was down 0.5 per cent at 2,872.82. Australia’s S&P ASX 200 was nearly flat at 5,146.00 and South Korea’s KOSPI slid 0.9 per cent at 1,951.99. The Philippines Stock Exchange index closed 0.8 per cent up, while other Southeast Asian bourses were lower.

OIL: U.S. crude lost 72 cents to $47.29 a barrel in electronic trading on the New York Mercantile Exchange. It fell 48 cents on Wednesday. Brent crude, used to price international oils, shed 73 cents at $48.24. Its price fell 86 cents on Wednesday.

CURRENCIES: The dollar fell to 104.33 yen from 105.98 the previous day. The euro lost early gains and was down to $1.1188 from $1.1268.