World markets are mixed Tuesday ahead of key economic releases from the 19-country eurozone, which has come to an agreement with the U.S. on holding off on new tariffs.
KEEPING SCORE: Britain’s FTSE 100 rose 0.1 percent in early trading to 7,709.97 while Germany‘s DAX fell 0.2 percent to 12,767.07. France‘s CAC 40 shed 0.2 percent to 5,482.26. Wall Street was set for a subdued open, with Dow futures slipping less than 0.1 percent to 25,279.00. S&P 500 futures rose 0.1 percent to 2,805.70.
ASIA’S DAY: Markets were mostly higher after the Bank of Japan largely maintained the status quo while allowing some flexibility to achieve yield targets. Japan’s Nikkei 225 index rose less than 0.1 percent to 22,553.72 and South Korea’s Kospi added 0.1 percent to 2,295.26. The Shanghai Composite index gained 0.3 percent to 2,876.40. Hong Kong’s Hang Seng index bucked the regional trend, falling 0.5 percent to 28,583.01. Australia’s S&P ASX 200 added less than 0.1 percent to 6,280.20. Shares fell in Indonesia but were higher in Taiwan and Singapore.
BOJ MEETING: In a widely watched statement, the Bank of Japan kept its monetary policy steady as expected. It maintained its target for the 10-year government bond yield at around zero percent and that for short-term interest rates at minus 0.1 percent. The bank said yields will be allowed to move up or down “to some extent mainly depending on developments in economic activity and prices.” Sustained relatively strong growth had raised expectations that the central bank may need to consider further tempering its massive purchases of government bonds and other assets.
Investors are also watching monetary policy meetings in the U.S. and U.K. The Bank of England is expected to nudge up its key interest rate by a quarter point on Thursday despite uncertainty around Brexit as inflation remains high.
ANALYST’S TAKE: “The expectation had likely been for more tweaks from the Bank of Japan beyond the adoption of further flexibility in yield movements. With the affirmation towards the current ultra-loose monetary policy … and with the passing of event risks, Asian equity markets can be seen finding some relief. The same may not be said for European markets with the string of Eurozone releases lined up,” said Jingyi Pan, a market strategist at IG.
CHINESE PMI: China’s manufacturing activity pulled back slightly in July, the National Bureau of Statistics said. The official manufacturing purchasing managers’ index was 51.2 in July, down from 51.5 a month earlier. Readings above 50 indicate expansion on the index’s 100-point scale. Although new export orders were stable, they came in at just below the neutral level for the second month. “Chinese PMI is on the soft side, reinforcing expectations that the government would introduce more measures to secure its economy,” given trade tensions between the U.S. and China, said Song Seng Wun, an economist at CIMB Private Banking.
ENERGY: Benchmark U.S. crude dropped 40 cents to $69.73 per barrel in electronic trading on the New York Mercantile Exchange. It rose 2.1 percent to settle at $70.13 per barrel on Monday. Brent crude, used to price international oils, fell 35 cents to $75.20.
CURRENCIES: The dollar rose to 111.44 yen from 111.00. The euro ticked up to $1.1721 from $1.1710.