US stocks surge after BOJ’s surprise move
New York, Jan 30: The US stocks posted solid gains on Friday as the Bank of Japan (BOJ) unexpectedly decided to implement a negative interest rate policy.
The Dow Jones Industrial Average leapt 396.66 points, or 2.47 percent, to 16,466.30. The S&P 500 soared 46.88 points, or 2.48 percent, to 1,940.24. The Nasdaq Composite Index jumped 107.28 points, or 2.38 percent, to 4,613.95, Xinhua news agency reported.
After the conclusion of a two-day policy board meeting, the BOJ said on Friday it would introduce negative interest rates from next month to encourage more lending and business spending amid projections that the central bank will not clear its 2 percent inflation goal.
The BOJ surprised markets here, with economists widely believing that further easing measures announced on Friday would be negligible if at all. The BOJ said it plans to introduce a negative interest rate from February 16, as falling oil prices have hampered the bank’s reflationary efforts.
While the European Central Bank has already plunged into negative interest rates, the BOJ initially said it was reluctant to follow suit.
Tokyo stocks closed sharply higher Friday after the BOJ decision, with the 225-issue Nikkei Stock Average surging 2.80 percent.
Also, the market got support following the release of the US real gross domestic product (GDP) data for the fourth quarter of 2015. The weak GDP data raised expectations that the US Federal Reserve would go slow on future interest rate hikes.
The US real GDP increased at an annual rate of 0.7 percent in the fourth quarter of 2015, according to the advance estimate released by the Commerce Department Friday. In the third quarter, real GDP increased 2.0 percent.
Real GDP increased 2.4 percent in 2015, unchanged as in 2014.
In corporate news, shares of Amazon.com plunged 7.61 percent to $587 apiece on Friday after the e-commerce giant reported weaker-than-expected quarterly results.
For the week, the Dow gained 2.3 percent, the S&P 500 added 1.7 percent, while the Nasdaq was up 0.5 percent.
The CBOE Volatility Index, often referred to as Wall Street’s fear gauge, dropped 9.90 percent to end at 20.20 on Friday.
In other markets, oil prices extended gains Friday as data showed US oil drillers are cutting production.
The West Texas Intermediate for March delivery moved up 40 cents to settle at $33.62 a barrel on the New York Mercantile Exchange, while Brent crude for March delivery increased 79 cents to close at $34.74 a barrel on the London ICE Futures Exchange.
The US dollar climbed against the Japanese yen Friday to the highest level in six weeks following the BOJ decision.
In late New York trading, the euro fell to $1.0829 from $1.0958 in the previous session, while the dollar bought 121.17 Japanese yen, higher than 118.78 yen of the previous session.
Gold futures on the COMEX division of the New York Mercantile Exchange rose slightly on Friday after worse-than-expected US economic growth data.
The most active gold contract for April delivery edged up $0.3, or 0.03 percent, to settle at $1,116.40 per ounce. (IANS)