BoJ’s decision to leave rates unchanged boosts global markets

Résumé détaillé

London — Global stocks neared one-month highs on Tuesday, after the Bank of Japan left monetary policy unchanged, bolstering the yen and Japanese stocks, while Chinese equity…

London — Global stocks neared one-month highs on Tuesday, after the Bank of Japan left monetary policy unchanged, bolstering the yen and Japanese stocks, while Chinese equity investors took little heart from speculation about a huge government rescue package.

The MSCI All-World index was up 0.2%, near one-month highs, thanks in part to a 3% rebound in Hong Kong stocks that slumped the previous day, when foreign outflows gathered pace and short selling surged.

Chinese stocks staged a more muted recovery, having touched their lowest in five years the previous day after the country's cabinet pledged to take more effective measures to stabilise market confidence. One option included mobilising about 2-trillion yuan ($278.53bn) to support the stock market, according to a Bloomberg News report.

Elsewhere, investors have been encouraged by the prospect of falling interest rates in other major economies, including the US, the eurozone and UK, which have seen the benchmark US S&P 500 officially enter a bull market and Germany’s DAX trade within sight of late 2023’s record peaks.

Concern about the Chinese economy, where the real-estate sector in particular is under stress, has seen foreign investors take a big step back in the last couple of years.

Lombard Odier economist Samy Char said the risk of the kind of aggressive sell-off that has hit Chinese markets this week spilling into other parts of the financial world was low, but pain for domestic investors looked inevitable.

“It is a surplus economy. There are a lot of savings in the private sector. So there is no risk of financial contagion and the financial system failing,” he said.

“They have a sufficient amount of room to manoeuvre and savings to make sure they can prevent a financial accident. What you can’t prevent is the fact that you need digest excesses and it means some loss taking,” Char added.

The yuan staged its biggest one-day rally against the dollar in a month in the offshore market.

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