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World shares fall on Japan stimulus disappointment | World shares fall on Japan stimulus disappointment |
(about 5 hours later) | |
World share indexes have fallen after the Bank of Japan (BoJ) held off taking new measures to calm markets. | World share indexes have fallen after the Bank of Japan (BoJ) held off taking new measures to calm markets. |
BoJ governor Haruhiko Kuroda said the central bank would consider fresh steps if borrowing costs spike in the future, but opted against further action now. | BoJ governor Haruhiko Kuroda said the central bank would consider fresh steps if borrowing costs spike in the future, but opted against further action now. |
The news disappointed some investors, who are worried about the long-term prospects for monetary stimulus programmes in Japan and the US. | The news disappointed some investors, who are worried about the long-term prospects for monetary stimulus programmes in Japan and the US. |
Stock markets in the US and Europe all finished Tuesday's session lower. | |
In Europe, London's FTSE 100, France's Cac-40 and Germany's Dax ended the day down about 1%. | In Europe, London's FTSE 100, France's Cac-40 and Germany's Dax ended the day down about 1%. |
In New York, the Dow Jones finished down 0.76% at 15,122.02. | |
Earlier, Japan's Nikkei 225 index had closed down 1.45% at 13,317.62. | Earlier, Japan's Nikkei 225 index had closed down 1.45% at 13,317.62. |
'No imminent need' | 'No imminent need' |
In a statement, the BoJ said that Japan's economy had been picking up and was "expected to return to a moderate recovery path". | In a statement, the BoJ said that Japan's economy had been picking up and was "expected to return to a moderate recovery path". |
Yields on benchmark 10-year government bonds had spiked in late May - indicating that markets expect the central bank eventually to start raising interest rates again. | Yields on benchmark 10-year government bonds had spiked in late May - indicating that markets expect the central bank eventually to start raising interest rates again. |
But Mr Kuroda told a news conference: "With our efforts to give more flexibility to our market operations, volatility in the bond market has stabilised. | But Mr Kuroda told a news conference: "With our efforts to give more flexibility to our market operations, volatility in the bond market has stabilised. |
"So there was no imminent need to decide on a new tool now." | "So there was no imminent need to decide on a new tool now." |
Global stock markets have risen significantly since Japanese authorities began a huge programme of stimulus measures in April, promising to inject 135 trillion yen ($1.4tn; £900bn) into the economy by the end of 2014. | Global stock markets have risen significantly since Japanese authorities began a huge programme of stimulus measures in April, promising to inject 135 trillion yen ($1.4tn; £900bn) into the economy by the end of 2014. |
Prime Minister Shinzo Abe, who was elected last year, has been pushing for the Bank of Japan to do more to help the economy. | Prime Minister Shinzo Abe, who was elected last year, has been pushing for the Bank of Japan to do more to help the economy. |
His plan, a combination of big government spending as well as an aggressive central bank asset buying programme, has been dubbed "Abenomics". | His plan, a combination of big government spending as well as an aggressive central bank asset buying programme, has been dubbed "Abenomics". |
Gold under pressure | Gold under pressure |
Investors have also been encouraged by the US Federal Reserve's continued $85bn-a-month programme of quantitative easing (QE), but are now worried about when those stimulus measures will be withdrawn. | Investors have also been encouraged by the US Federal Reserve's continued $85bn-a-month programme of quantitative easing (QE), but are now worried about when those stimulus measures will be withdrawn. |
Last week the European Central Bank also declined to do more to boost economic growth, while the Fed is discussing when its QE programme will be wound down | Last week the European Central Bank also declined to do more to boost economic growth, while the Fed is discussing when its QE programme will be wound down |
Some investors had factored in new operations from the BoJ, and their disappointment prompted a fall in Japanese shares and government bonds, and a rebound in the yen. | Some investors had factored in new operations from the BoJ, and their disappointment prompted a fall in Japanese shares and government bonds, and a rebound in the yen. |
The yen rose nearly 2% against the dollar, with the US currency trading at 96.95 yen, as investors moderated their expectations that the BoJ would be injecting yet more yen cash into the markets. | The yen rose nearly 2% against the dollar, with the US currency trading at 96.95 yen, as investors moderated their expectations that the BoJ would be injecting yet more yen cash into the markets. |
The price of gold also fell to a near-three week low. Spot gold was down 1.1% at $1,371.11 an ounce. | The price of gold also fell to a near-three week low. Spot gold was down 1.1% at $1,371.11 an ounce. |
Stimulus measures from central banks around the world have boosted gold prices to record highs in recent years by keeping up pressure on interest rates while stoking inflation fears. | Stimulus measures from central banks around the world have boosted gold prices to record highs in recent years by keeping up pressure on interest rates while stoking inflation fears. |
Speculation they may be set to end is now putting pressure on the metal. | Speculation they may be set to end is now putting pressure on the metal. |
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