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Market Update

U.S. Markets Rebound on Japan Monetary Easing, Weekly Claims Rise


Author: Nichole Harper
ticker.com
Last Update: 12:01 PM ET April 04 2013

12:00 PM New York – U.S. stocks rebounded after Bank of Japan embarked on aggressive and bold monetary easing with a goal to double monetary base and inflation of 2% in the next two years. U.S. weekly jobless claims increased more than expected.

Stocks in New York opened higher after Japan embarked on bold and aggressive monetary easing to end two decades economic stagnation.

Domestically, weekly jobless claims rose at the end of last week and central banks in Europe and England held rates and bond buying programs.

S&P 500 index increased 0.4% to 1,559 and the narrow Dow Jones Industrial Average gained 0.1% to 14,567. Nasdaq Composite Index increased 0.1% to 3,214.

Japan embarked on a bold and aggressive experiment to rekindle growth and revive prices.

The central bank in a dramatic shift in policy said it plans to purchase $1.4 trillion of government bonds in the next two years and target monetary base and not short term interest rates.

The central bank said it plans to double monetary base in two years to 270 trillion yen or $2.9 trillion by the end of 2014 and “take all necessary measures” to achieve 2% inflation in two years.

The move lifted the market sentiment after the recently appointed Bank of Japan Governor Haruhiko Kuroda delivered on his recent promises at the time of confirmation.

The Nikkei index reversed the early loss of 2% to close up 2.7% and the yen declined to 94.27 against one dollar.

European Central Bank held its benchmark rate at 0.75% and acknowledged that the first response to impose a tax on small bank deposits was “not smart, to say the least.”

The head of the E.C.B., Mario Draghi stressed at the press conference that Cyprus was “no template” for future crises and events in Cyprus and subsequent market calm only reinforces “we are now in a position to cope with serious crises without them becoming systemic.”

The Bank of England left its key lending rate at 0.5% and held its bond buying program at 375 billion pounds. The rates have been on hold since March 2009.

Weekly Jobless Claims Rise

Weekly jobless claims increased 28,000 to a seasonally adjusted 385,000, the highest since November, the Labor Department said today.

The last week data may have been affected by religious holidays and spring breaks for schools.

The four-week moving average of new claims increased 11,250 to 354,250.

Stocks in Review

Facebook Inc (FB) gained 0.2% after the company plans to announce a cell phone that is optimized for its users and made by a Taiwan based company.

Japanese banks surged after the central bank accelerated bond buying program. Mizuho Financial Group Inc increased 8.2% and Sumitomo Mitsubishi Financial gained more than 5%.

Fresenius Medical Care AG & Co. soared 26% after the renal care services provider said it plans to buy back 385 million euros of its own stock.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc