- Yellen signals to Congress that U.S. is ready for rate rise
- ECB extends bond buying, leaves monthly amount unchanged
Japan’s Topix index fell by the most in a month, extending a global rout after the scale of the European Central Bank’s additional easing disappointed investors and the yen strengthened.
The Topix dropped 1.8 percent to 1,574.02 at the close in Tokyo, to cap a 1.3 percent weekly decline. All of its 33 industry groups fell, led by shippers. The Nikkei 225 Stock Average lost 2.2 percent to 19,504.48, the most since Sept. 29. The yen jumped 0.5 percent against the dollar on Thursday as investors sought haven assets after the ECB boosted stimulus by less than expected.
The ECB’s additional easing “is about 60 percent of what was hoped for,” Mitsuo Shimizu, deputy general manager at Japan Asia Securities Group Ltd. in Tokyo, said by phone. “The market was hoping for some Draghi magic.”
Anticipation for easing had grown in recent weeks as ECB President Mario Draghi and his closest colleagues communicated growing concern about the low pace of euro-area inflation and the risks to the economic recovery.
Mitsui OSK Lines Ltd. slumped 3.7 percent to lead a decline by marine-transport stocks after Nomura Holdings Inc. cut its rating on several shippers. Office-equipment maker Askul Corp. sank 5.1 percent after Jefferies Group LLC said its profit forecast was “slightly negative.” Drugmaker Hisamitsu Pharmaceutical Co. tumbled 5.3 percent after a Nikkei newspaper report the Japanese government may limit the use of medical patches.
Fujitsu Ltd. gained 2.3 percent after the Nikkei newspaper reported the electronics maker is considering merging its personal-computer operations with Toshiba Corp. and Vaio, formerly Sony Corp.’s PC unit. Nippon Suisan Kaisha Ltd. gained 2.6 percent, the most on the Nikkei 225, after Daiwa Securities Group Inc. upgraded the seafood producer to outperform.
E-mini futures on the Standard & Poor’s 500 Index added 0.2 percent after the underlying gauge dropped 1.4 percent on Wednesday, the most in two months. The Stoxx Europe 600 Index slumped 3.1 percent in its biggest selloff since August.
Federal Reserve Chair Janet Yellen delivered a cautiously upbeat outlook for the U.S. economy on Thursday, signaling the conditions necessary for an interest-rate increase have been met and that she hopes to tighten monetary policy slowly after liftoff. Investors are awaiting a report on November payrolls later Friday.
Her comments to a Congress committee were almost identical to portions of a speech she gave Wednesday. Traders see a 76 percent chance Fed will raise rates at the conclusion of its next meeting on Dec. 16.
Meanwhile, the ECB will extend its quantitative easing program by six months until at least March 2017 at the current rate of 60 billion euros ($66 billion) a month, Draghi said. The bank cut its deposit rate to minus 0.3 percent, in line with forecasts by economists in a Bloomberg survey. Policy makers left the main refinancing rate and the marginal lending rate unchanged. The euro soared.
Japanese stocks have weathered a cooling Chinese economy and the prospect of monetary tightening by the Fed to rank among the best performers in developed countries this year. The Topix had rallied 14 percent in 2015 through Thursday.