In This Article:
* Europe's shares inch higher after Fed rate cut
* BOJ on hold, as expected; disappoints some who hoped for a move
* Bond yields nudge up but stay below recent highs
* Oil futures drift higher as geopolitical risks remain
* Sterling waits for BoE's latest rate meeting, Brexit view
By Marc Jones
LONDON, Sept 19 (Reuters) - A positive start in Europe nudged the main world share indexes and bond yields higher on Thursday, after the U.S. Federal Reserve's second interest rate cut of the year while Japan and others kept their limited remaining powder dry.
The effects of the trade war has seen central banks around the world swing back into support mode this year, but the Fed's central message on Wednesday was that it wasn't expecting a major capitulation of the economy.
The Bank of Japan and Switzerland's central bank then both kept their deeply negative interest rates on hold. Brexit-bound Britain was expected to do the same later, while an outlier hike in Norway also came with a hint it would be the last.
It was enough to push London's FTSE, Frankfurt's Dax and Paris, Milan and Madrid up between 0.2% and 0.8% in early moves after a broadly subdued Asian session.
MSCI's broadest index of Asia-Pacific shares had ended down 0.5% as a 1% fall in Hong Kong and 1.1% drop in India offset 0.4% gains on Japan's Nikkei and from China's bluechip stocks.
In line with the view of no economic Armageddon, the benchmark government bond yields which act as a proxy for global borrowing costs, also rose.
The more sensitive two-year U.S. yields inched up to 1.75% and Europe's key 10-year German Bund yield was up around 2 basis points albeit still below highs hit last week and at a mind-boggling -0.49%.
"This is not ‘QE4ever’ as we’ve heard it called," analysts at RBC said of the Fed's decision and signals. "We shouldn't go too far in putting on QE-like trades”.
In the currency market, Bank of Japan's inaction saw the yen rise off a seven-week low versus an already lower dollar and stage something of a jump against the Australian dollar.
The BOJ had maintained its pledge to guide short-term interest rates at minus 0.1% and the 10-year government bond yield around 0%. It also signalled it could add stimulus as early as next month but some traders had expected a move on Thursday after the Fed's rate cut.
Yen bulls took the currency as far as 107.79 to the U.S. dollar before it settled at 108.06 for a gain of 0.4% on the day. The move against the Aussie dollar had been as large as 1%..
"There were large yen-buying orders before the BOJ, and that just carried through," said Tohru Sasaki, head of Japan markets research at J.P. Morgan Securities in Tokyo.