Bank of Japan move hits world markets

STOCK markets around the world suffered another blow yesterday after the Bank of Japan reined in its money printing programme.

London’s FTSE 100 Index was down more than 120 points at one stage as traders vented their disappointment as monetary policymakers confined themselves to predicting a moderate economic recovery in the coming months.

It later recovered some of its poise to close 60.37 points or 0.9 per cent lower at 6,340.08.

Analysts had been hoping to see more from the central bank, either in the way of more actual stimulus or simply verbal reassurances.

Michael Hewson, senior market analyst at CMC Markets, said traders were demonstrating “a classic case of spitting the dummy” as global markets sold off sharply. He added: “Some had hoped that the central bank would increase its current levels of stimulus, but that was never really likely, given that the current programme was only announced in April and the Japanese economy has been improving.”

Markets rallied heavily in the first few months of the year as central banks made a concerted effort to support the global economy with extra money. But indices have given up some of their gains in recent weeks amid persistent worries that the US Federal Reserve may soon scale back its stimulus programme.

Japan’s Nikkei stock index fell 1 per cent yesterday, giving up some of the 4.9 per cent rise seen after an upward revision of first-quarter economic growth data on Monday.