World stocks lack direction after US Fed’s lack of guidance
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London — Stock markets struggled for direction on Friday as investors worried about a lack of detail in the US Federal Reserve’s policy shift while Japanese markets were roiled as Prime Minister Abe Shinzo resigned for health reasons.
The Fed’s widely awaited shift in its policy framework, unveiled on Thursday, saw the central bank place more emphasis on boosting economic growth and less on worries about letting inflation run too high. The policy aims for 2% inflation on average so that too low a pace would be followed by an effort to lift inflation “moderately above 2% for some time”.
Stocks initially jolted higher as investors bet interest rates would remain low for longer and more stimulus was likely. But share markets have since been choppy, with some traders disappointed that the Fed did not reveal more details about how the new framework will work, or provide any clues as to what it will do at its next policy meeting.
“It’s not so much about what to do about inflation when it comes but about getting inflation above target. The challenge is to get inflation up to target and not very much was said about that,” said Colin Asher, a senior economist at Mizuho.
The Euro Stoxx 50 recovered from earlier losses and was last up 0.03%, while Germany’s DAX 30 slid 0.49%. Britain’s FTSE 100 was 0.4% higher.
US stock futures clawed their way higher and back to near record levels after earlier volatile trading on concern about the impact of a hurricane that struck the centre of the US oil industry. S&P 500 e-mini futures was were last up 0.34%.
Japanese shares dropped, with the Nikkei 225 down 1.4%. Abe resigned on Friday because of a chronic health condition, saying he would stay as prime minister until a new leader was appointed. There has been speculation about his health all week.
Asian shares limped higher, with the MSCI’s broadest index of Asia-Pacific shares excluding Japan gaining 0.19%.
“This is a negative for Japanese stocks because it raises questions about what policies come next. We do see the familiar pattern of falling stocks pushing up the yen,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
The yen, seen as a safe-haven currency to buy in times of uncertainty, jumped 0.4% to ¥106.12 per dollar.
Elsewhere in currency markets the dollar dropped 0.6% against a basket ...
The Fed’s widely awaited shift in its policy framework, unveiled on Thursday, saw the central bank place more emphasis on boosting economic growth and less on worries about letting inflation run too high. The policy aims for 2% inflation on average so that too low a pace would be followed by an effort to lift inflation “moderately above 2% for some time”.
Stocks initially jolted higher as investors bet interest rates would remain low for longer and more stimulus was likely. But share markets have since been choppy, with some traders disappointed that the Fed did not reveal more details about how the new framework will work, or provide any clues as to what it will do at its next policy meeting.
“It’s not so much about what to do about inflation when it comes but about getting inflation above target. The challenge is to get inflation up to target and not very much was said about that,” said Colin Asher, a senior economist at Mizuho.
The Euro Stoxx 50 recovered from earlier losses and was last up 0.03%, while Germany’s DAX 30 slid 0.49%. Britain’s FTSE 100 was 0.4% higher.
US stock futures clawed their way higher and back to near record levels after earlier volatile trading on concern about the impact of a hurricane that struck the centre of the US oil industry. S&P 500 e-mini futures was were last up 0.34%.
Japanese shares dropped, with the Nikkei 225 down 1.4%. Abe resigned on Friday because of a chronic health condition, saying he would stay as prime minister until a new leader was appointed. There has been speculation about his health all week.
Asian shares limped higher, with the MSCI’s broadest index of Asia-Pacific shares excluding Japan gaining 0.19%.
“This is a negative for Japanese stocks because it raises questions about what policies come next. We do see the familiar pattern of falling stocks pushing up the yen,” said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo.
The yen, seen as a safe-haven currency to buy in times of uncertainty, jumped 0.4% to ¥106.12 per dollar.
Elsewhere in currency markets the dollar dropped 0.6% against a basket ...