Britain’s FTSE 100 edged lower in Tuesday morning trade, falling to 6,170, even as Japan’s central bank promised unlimited economic stimulus.
Under pressure from new prime minister Shinzo Abe to boost the economy and see off deflation, the Bank of Japan (BoJ) announced that it would double its inflation target to 2% and carry out unlimited asset purchases from 2014.
Economists, however, said the long-awaited measures might not be as aggressive as investors had expected, prompting today’s general trend downwards on European and Asian markets. Japan’s Nikkei 225 dropped 0.35%, while the Eurofirst 300 dropped 0.6%
Marco Wagner of Commerzbank said the BoJ had merely paid ‘lip service’ to government demands for action.
‘The medium- to long-term inflation target of 2% had essentially already existed and the expansion of the asset purchase programme doesn’t take effect until 2014,' he commented.
Wagner added that more stimulus would be forthcoming, though, when a new central bank governor is appointed in April.
ING economists pre-empted today's move lower, saying ‘markets may view this latest measure as a touch disappointing’.
Ocado board shake-up welcomed
Among individual shares in London, Ocado (OCDO.L) rose 5.8% to 100p after it appointed former Marks & Spencer chairman Stuart Rose to replace Michael Grade as chairman.
Analysts said loss-making Ocado had made a good choice. Clive Black of Shore Capital commented: 'Sir Stuart is someone we hold in high regard. He is great fun, colourful, opinionated and experienced. He will bring much needed esteem to Ocado, a company that had a tarnished flotation to our minds and has a fundamentally flawed business model.'
Tate & Lyle (TATE.L) topped the FTSE 100, up 1.7% to 808p after Berenberg raised the shares to a ‘buy’.