2016-09-21 13:47:29

After monetary policy decision by the Bank of Japan global stock indices are rising. The Bank of Japan kept interest rates at the level of -0.1%. The Bank of Japan introduced a target level for the 10-year interest rates in order fight against deflation. The Bank also announced that it would continue its quantitative easing program until inflation exceeds 2 per cent. Among the other measures the Bank mentioned possible of the increase in the monetary base in the future. It is unlikely that the preservation of the target volume of bond purchases at the level of 80 trillion yen per year and the target level of 10- year interest rates will accelerate inflation or improve financial conditions. It is not excluded that in future the Bank of Japan will continue to reduce interest rates.

Anyway, global stocks indices rose after the Bank of Japan confirmed intention to continue monetary policy easing. At the beginning of European session the index is StoxxEurope600 rose by 1%, while the banking sector added 2.5%. At the end of the Asian session Japanese Nikkei Stock Average rose by 1.9%, to 16807,62 points. At the closure of trades Chinese index Shenzhen Composite rose 0.3%, ChiNext Price by 0.2%, Shanghai Composite by 0.1%. U.S. stock indexes are also growing. At the beginning of European session the index S&P500 rose by 0.5% and is now trading at the level of 2145.0.

However, many investors do not believe that the uptrend in the stock market is possible. Measures taken by the Bank of Japan has hardly changed, and investors now pay full attention to the meeting on the US Fed in September, which will finish later today. At 21:00 (GMT+3) interest rate decision by the UD Fed will be published. Although it is not expected that the interest rate will be raised, indications of the possible increase in rate in December can jeopardy further growth in the risky assets, including shares, which have been observed since the beginning of February and in the summer.

Earlier in September, the Boston Fed President Eric Rosengren has said that there are all grounds for monetary policy tightening, as it will help avoid overheating of the economy.

At the moment, investors estimate probability of the rate hike at 18%; probability of the rate hike in December with has reached 60%. Investors also will closely monitor the speeches of the FRS managers at the press-conference which will begin at 21:30 (GMT+3) in order to understand monetary policy plans of the US Fed for this year. If the Fed shows possibility of the further monetary tightening in the USA till the end of the year, the USD will go up, while risky stock market instruments and indices will go down.

S&P500: In anticipation of the monetary policy decision by the US fed.  Fundamental analysis of 21.09.2016