Financial markets decline in European opening amid the
downgrade of Spain's credit rating. Renewed concerns in the
sovereign debt crisis in the Eurozone hurt market sentiment. In
Asia, the Bank of Japan expectedly eased monetary policy but
increasing the size of the Asset Purchase Program so as to boost
the economic recovery and inflation. European bourses gapped down
at open. In the commodity sector, gold eased after Thursday's
rally after the FOMC meeting. Investors' interest in the yellow
metal returned amid rekindled hope of further Fed's easing later
Standard & Poor's cut Spain's credit rating by 2 notches
to BBB+ from A due to the country's budget deficits and dismal
economic outlook. S&P's is the first of the 3 major rating
agencies to take away Spain's A credit rating. This aroused
concerns about worsening of the Eurozone crisis although the IMF
successfully increased the global funding to US$ 430B.
The Bank of Japan eased monetary policy again in April by
increasing the size of its Asset Purchase Program. Policymakers
announce to increase its JGB buying by around 10 trillion yen,
extend the duration of JGBs targeted to 3 years from the current
2 years, and would increase the size of its ETF buying by 0.2
trillion yen and its J-REIT buying by 0.01 trillion yen.
Moreover, the central bank reduced the size of its fixed rate
market operations by 5 trillion yen as a result of "taking into
account recent episodes of under-subscription".
On the dataflow, Japan's inflation remained mild with the core
national CPI gaining +0.2% y/yin March from +0.1% a month ago.
The leading Tokyo core CPI fell -0.5% y/y in April following a
-0.3% contraction in the prior month. Growth in industrial
production was disappointing with a +1.0% gain in March, compared
with consensus of a +2.3% rise, despite an improvement from the
-1.6% dip a month ago.
The US economic growth probably eased to +2.5% q/q in 1Q12,
from +3.0% in the last quarter of 2011. The University of
Michigan Confidence Index might have been revised higher, by +0.2
point, to 75.9 n April.