Monday, March 17, 2003
Negotiations between allies kept market players on edge last week. Trading was volatile. Some indexes could not recoup enough on Thursday and Friday to make up for losses earlier in the week. Rumors and hopes gave quixotic traders sufficient substance to buy equities. Emotions swirling around the threat of war have been mostly negative for stocks, but many investors have decided that a war with Iraq would be very short, followed in turn by higher profits - which are really what the markets are all about! When the week ended, results were mixed with eight of the indexes followed here up and five down. Gains ranged from 0.3 percent (Australian all ordinaries) to 6.4 percent (Paris CAC). Losses ranged from 0.9 percent (Canadian S&P/TSX composite) to 1.7 percent (Nikkei).
Japan's new Bank of Japan governor
Prime Minister Junichiro Koizumi met with his new central bank governor Toshihiko Fukui as pressure mounts on the Bank of Japan to join the government in acting to spur the economy and bolster stock prices. Japan's ruling coalition is urging the BoJ to expand purchases of shares held by banks beyond the current ¥2 trillion ($17 billion) planned by September to ¥4 trillion. The call is part of a set of measures to shore up stock prices before banks and other companies end their business year on March 31. The Nikkei has fallen to its lowest level since January 1983. The drop has further eroded the capital of Japan's banks, which own more than $178 billion in equities.
Fukui takes control at time when everyone is offering advice. Heizo Takenaka, the financial services minister, said the government would not try to reign in the BoJ's independence. But Takenaka warned that the BoJ may be asked to take extra measures beyond the doubling of share purchases. The ruling parties are also urging the bank to buy foreign bonds, exchange-traded funds (ETFS), and real estate investment trusts (REITS). Finance Minister Masajuro Shiokawa said the government can't infringe on the bank's independence by requiring foreign bond purchases.
Pacing the floor
