PARIS (Reuters) – The New York Stock Exchange opened lower on Tuesday the day after a session in the red, following fears of a recession, while the surprise decision of the Bank of Japan (BoJ) to adjust its interest rate strategy hardly encourages a return to risk taking.
In early trading, the Dow Jones index lost 29.67 points, or 0.09%, to 32,727.87 points and the broader Standard & Poor’s 500 fell 0.30% to 3,806.12 points.
The Nasdaq Composite lost 0.53%, or 55.91 points, to 10,490.11.
The last of the major central banks to still pursue an accommodating policy, the BoJ surprised the markets by announcing, after two days of monetary policy meetings, that it would henceforth allow Japanese ten-year bond yields to fluctuate within a range of -0.5% to +0.5% against a ceiling previously set at 0.25%.
This decision is seen as a first step towards the end of its ultra-accommodating policy, while some analysts expect next year the official abandonment of the strategy to fight against deflation in the archipelago and the start of a recognition that Japan, like other economies, is faced with rising prices.
“The decision can be interpreted as a test for a possible abandonment of the stimulus policy which was implemented (…) to try to stimulate demand and wake up prices”, writes Susannah Streeter, analyst at Hargreaves Lansdown.
In the wake of the rise in the yield of Japanese ten-year bonds which hit a peak since 2015 at 0.47% on Tuesday, the rate of Treasuries of the same maturity jumped by more than ten points to 3.68%, to a peak of three weeks.
Money markets estimate with a probability of 65.2% that the US Federal Reserve (Fed) will raise its rates in February by 25 basis points, to 4.5%-4.75%, before a peak in the cost of credit at 4.878% by May 2023.
In values, Nike fell 0.63% ahead of the publication of its quarterly results after the close of Wall Street.
Chinese groups listed in New York, Alibaba, JD.Com, Netease and Baidu, lost 1.80% to 3.05% in response to an increase in cases of contamination by the SARS-CoV-2 virus in China.
The electric vehicle manufacturer Lucid Group jumped 5.11% after a successful fundraising of 1.5 billion dollars (1.41 billion euros).
(Written by Claude Chendjou, edited by Kate Entringer)
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