Loonie loses gains after BoJ rate surprise

Britain’s blue-chip index has jumped in today’s session after the Bank of Japan (BOJ) surprised stock markets with its decision to adopt negative interest rates.

The Bank of Japan (BoJ) has now joined the European Central Bank in introducing negative interest rates, after cutting rates for some commercial banks holding money with it from 0.1% to -0.1%.

The benchmark 225-issue Nikkei average soared 476.85 points, or 2.80 percent, to close at 17,518.30 on the Tokyo Stock Exchange, after swinging between hefty gains and losses.

Rival BT also rose 2.1 percent, as it completes its takeover of mobile network operator EE on Friday, opening the way to creating a single integrated network offering a combination of telecoms and TV services. The Dow Jones E-mini (March 2016) contract was higher by 0.83 percent, the S&P 500 E-mini (March 2016) contract was higher by 0.82 percent while the Nasdaq 100 E-mini (March 2016) was higher by 0.68 percent.

Negative interest rates pressured the yen, which traded at 121.38 to the United States dollar, near six-week low of Y121.70 touched on Friday. Excess reserves parked at the Bank of Japan will now attract a charge of 0.1 per cent. It’s meant to spur inflation by forcing lenders to put their cash into circulation. Some analysts saw the ¥116 level as a possible line in the sand that might have spooked some policy makers and contributed to Friday’s decision.

Sainsbury’s was the index’s top riser, up 3.7 percent after a report in the Financial Times that its attempts to buy Argos-owner Home Retail had stalled.

Hong Kong’s Hang Seng gained 2.5 percent to 19,683, and the Shanghai Composite in mainland China rose 3.1 percent to 2,738. McKinley said there will be continued volatility in oil prices, but they will improve in the long-run as production growth slows.

ENERGY TALK: Russia said on Thursday it is actively discussing the instability of oil markets with the world’s key producers.

Investors grew wary of the possibility that the Organisation of the Petroleum Exporting Countries and Russian Federation could team up to cut supply.

US crude added about 1.2 percent to $33.61 per barrel and Brent futures also gained 1.2 percent to $34.28.

‘We won’t hesitate taking additional (easing) steps by expanding the quantity, quality of money, as well as through interest rate (cuts) if needed to achieve our price target, while scrutinising risks to the economy and prices, ‘ Kuroda said. The euro weakened to $1.0911 from $1.0932, but against the Japanese currency it rose to 131.87 yen from 129.92 yen.