Stocks climbed around the world with the S&P 500 Index surpassing a closing record as the yen dropped to a low of six years as the Bank of Japan raised its target for the monetary stimulus unexpectedly. Treasuries dropped with gold.
The S&P 500 rose 1% or 19 points to 2,014 topping the all-time high of September 18. The Dow Jones Industrial Average climbed 1% or 174 points to 17,369 after it settled an intraday record while the Nasdaq Composite index gained 1.25 or 60 points to 4,626. The Stoxx Europe 600 index gained 1.7% to pare its monthly loss.
According to Bloomberg the yen, Japan’s currency, tumbled beyond 111 per dollar for the first in more than six years. The Topix index climbed the most since June 2013. Gold dropped to the lowest price from July 2010.
The Bank of Japan boosted its annual target for increasing the monetary base to 80 trillion yen ($724 billion) from 60 to 70 trillion yen, as reported by the central bank. In addition to the stock rally, Japan’s public pension fund, the largest in the world, boosted the target for equity holdings.
New York-based head of multi-asset strategies at Voya Investment Management LLC, Paul Zemsky said, “The surprise move from Japan was a big driver getting markets overseas excited and it’s following through into the US. It also makes people extrapolate, thinking maybe the ECB might be doing a little more now.”
Capital Economics chief global economist, Julian Jessop said, “The willingness of the Bank of Japan to ease further in the fight against deflation will encourage those who think the ECB should be doing the same.”
ABC News quoted market analyst at IG, David Madden as having said, “The Japanese central bank has taken the QE baton from the Fed, and equity traders couldn’t be happier.”
Japan’s stock market climbed 4.8%, the highest level since 2007.
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