European markets were mostly higher on Friday morning following an underwhelming easing of monetary policy from the Bank of Japan. Relief that Japanese interest rates weren’t cut further into negative territory meant bank stocks were amongst the top risers, unwinding some heavy losses from the day prior ahead of ECB stress test results.
The BOJ kept interest rates steady despite a renewed political mandate for Abenomics and data showing worse-than-expected deflation. It is one of the clearest indications yet that central banks have reached the lower limit on interest rates. That, on the face of it, is a good thing for bank profitability.
Broader stock markets have dismissed the BOJ rumbling the liquidity party for now, with quarterly earnings taking centre stage.
Well-received results from Barclays (LON:BARC) and British Airways owner IAG (LON:ICAG) helped balance the FTSE 100 against a drag from commodity-related stocks as oil prices slid for a seventh day.
The effect of London’s cooling property market was clear for all to see in the latest results from estate agent Foxtons (LON:FOXT). The company blamed uncertainty surrounding the EU referendum for a 42% slump in profits. Unfortunately for Foxtons, higher taxes on foreigners and second-home owners is probably the reason, meaning profits aren’t about to improve anytime soon.
There was limited reaction in the euro after data showed inflation in the Eurozone rose modestly to 0.2% whilst GDP halved to 0.3%, matching estimates. Unemployment remains stubbornly higher at 10.1%.
US stocks look set for a mostly lower start as sliding oil prices and limited easing from the Bank of Japan weighs on the overextended rally. The Nasdaq 100 is bucking the trend after Amazon (NASDAQ:AMZN) and Google-parent Alphabet (NASDAQ:GOOGL) beat quarterly earnings expectations, adding to the run of good form amongst the top US tech companies.
USA pre-opening levels
S&P 500: 4 points lower at 2,166
Dow Jones: 42 points lower at 18,414
Nasdaq 100: 1 point higher at 4,722
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