AFP
|
|
European stocks surged yesterday as the Bank of Japan’s surprise stimulus sent investors on a buying spree.
Markets ended the week on a positive note, as the BoJ’s decision countered the gloom earlier this week caused by the end of the Federal Reserve’s massive monetary easing programme.
London’s benchmark FTSE 100 index closed 1.28% up at 6,546.47 points, while in Paris, the CAC jumped 2.22% to 4,233.09 points and Frankfurt’s Dax gained 2.33% to 9,326.87.
US markets were trading in record territory, with the Dow up 1.10% and Nasdaq rising 1.4%.
However, the euro dived below $1.25 for the first time for more than two years, driven by speculation that the Fed could raise interest rates sooner than expected.
And with problems crowding in on the Russian economy, the ruble tumbled to another record low against the dollar despite aggressive action by the Russian central bank which ramped up its interest rate by 1.5 percentage points to 9.5%.
The BoJ boosted its vast monetary easing programme on Friday, in a unexpected move aimed at reviving growth. It said it would add up to ¥20tn ($182bn) to its current asset-buying scheme, bringing it to ¥80tn annually.
At Capital Economics, chief economist Julian Jessop said that “the Bank of Japan’s announcement today ... is a timely reminder that not everyone has to follow the Fed”.
This would be particularly the case “in the eurozone if expectations build that the ECB will follow with full-blown QE (stimulus) of its own. More evidence of the diverging prospects for monetary policy should also provide an additional boost to the dollar across the board”.
The dollar pushed past ¥111 after the Japanese central bank acted, and after the US released forecast-busting economic growth data.
In company news, shares in French bank BNP Paribas jumped 3.46% to €50.14 in Paris, as it surprised investors with a 10.6% rise in third-quarter net profit to €1.5bn.
And Royal Bank of Scotland (RBS) shares jumped 6.21% to 388 pence after the state-rescued lender revealed net profits rebounded to £896mn in the three months to September.
International Airlines Group was another big FTSE gainer, with shares up 4.74% at 409.2 pence on increased third-quarter profits.
In commodity deals yesterday, gold slumped to a four-year low, diving to $1,161.16 per ounce, on the back of the strong dollar.
Meanwhile, the Brent North Sea crude for delivery in December slid to $85.36 a barrel from $86.03 one week earlier, while the US benchmark West Texas Intermediate recoiled to $80.18 a barrel compared with $81.38 a week earlier.
