Negative data continues to concern investors
The US was once again hit by less than flattering economic data today as worse than expected payroll reports were released, consolidating a poor week for the worlds largest economy. Shortly after the release of the data, speculation continued as to whether the recent signs of economic recovery that we have recently seen will continue.
After a decline when the data was released, the S&P 500 US Equity index clawed back some of those losses but still closed out 0.4% down. This meant that the index had fallen by 1% over the course of the week, unable to maintain momentum under the pressure of multiple poor reports. The losses were felt elsewhere as the FTSE Eurofirst 300 retreated by 1.6%, resulting in a loss of 2.2%.
One of the few positives from an otherwise horrendous day was to come out of Asia. The Nikkei 225 main gains of 1.6%, closing the week with an advance of 3.5%. Analysts are attributing the recent rally to news and later the confirmation of a massive quantitative easing package that will be filtered into the economy over the next two years. Japan has suffered with deflation for more than twenty years, something which the Bank of Japan plans to combat by potentially doubling the amount of yen in circulation. Furthermore, the central bank’s chief, Mr Kuroda, said that there was every possibility that the programme could be pushed to completion sooner if signs of growth are not meeting their targets.
Mr Kuroda said “We need to use every means available” and that he is “confident that all policies we need to achieve (a) two percent inflation in around two years are now in place”. Mr Kuroda was speaking to the press shortly after the programmes announcement, which followed a public showing of support from the country’s Prime Minister, Shinzo Abe. The Prime Minister told the new governor personally that he wanted the central bank to focus on the 2% inflation rate by 2015.
Naturally with every round of quantitative easing comes significant falls in the nations currency on the world’s currency market, so such an aggressive maneuver has seen the yen slide rather drastically. Against the dollar the yen fell by 3.4% for the week, while also falling 4.95% against the euro.
