Wall St gives up gains despite central bank stimulus

Wall Street gave up some earlier gains as concern about weak US economic data outweighed the reassurance that global central banks remain more committed than ever to bolster growth.

Bank of Japan Governor Haruhiko Kuroda began his term with a larger-than-expected boost to kick-start the Asian nation's economy including plans to purchase 7 trillion yen (US$73 billion) of bonds a month.

"This is an unprecedented degree of monetary easing," Kuroda told reporters, according to Reuters. "We took all available steps we can think of. I'm confident that all necessary measures to achieve 2 per cent inflation in two years were taken today."

The yen sank more than 3 per cent against the greenback, posting a similar loss against the euro.

"They eased a lot more than anticipated," Vassili Serebriakov, a foreign-exchange strategist at BNP Paribas in New York, told Bloomberg News. "It's a much more aggressive move than the investors expected. Markets weren't necessarily positioned for this."

In Frankfurt, European Central Bank President Mario Draghi pledged support for the euro zone economy following its meeting of policy makers today. While the ECB kept its key rate steady, as expected, Draghi said it was "ready to act".

"Weak economic activity has extended into the early part of the year and a gradual recovery is projected for the second half of this year, subject to downside risks," Draghi told reporters. "Against this overall background our monetary policy stance will remain accommodative for as long as needed."

The Bank of England also maintained its rate and asset purchase program.

In the US, the latest data on the labour market was in line with this week's weak reports. Jobless claims unexpectedly rose in the week ended March 30, climbing 28,000 to 385,000, the highest since November.

"What we do know is that the growth momentum has slowed, employment has slowed. The question is how much?" Millan Mulraine, a senior economist at TD Securities in New York, told Reuters.

The monthly payrolls report, due tomorrow, is expected to show employers created 200,000 jobs in March, keeping the unemployment rate at 7.7 per cent.

In afternoon trading in New York, the Standard & Poor's 500 Index slipped 0.06 per cent, while the Nasdaq Composite Index fell 0.18 per cent. The Dow Jones Industrial Average eked out a 0.04 per cent gain.

In Europe, the Stoxx 600 Index finished the day with a 1.1 per cent drop from the previous close. Benchmark stock indexes in Frankfurt, Paris and London closed 0.7 per cent, 0.8 per cent and 1.2 per cent lower respectively.

- BusinessDesk

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