US stocks dropped as well as Asian equity futures as investors are worried about the reluctance of central banks to add more stimulus. This was spurred by the Bank of Japan’s statement that it would keep its present program unchanged. Ten year Treasury yields dropped from a 14 month high. The yen slightly changed after surging the previous day.
The Standard & Poor’s 500 Index dropped 1 percent while futures on the Nikkei 225 Stock Average declined 2.8 percent. Contracts on the Hang Seng Index went down 0.6 percent. The MSCI All-Country World Index fell 0.7 percent.
Japan’s yen increased less than 0.1 percent in Tokyo after rallying the most in three years the previous day against the US dollar. West Texas Intermediate crude dropped 0.5 percent while the Australian dollar increased 0.3 percent.
The BOJ left its one year fixed rate loan facility unchanged. The bank has tapped it seven times due to a surge in volatility in which the yields went up from record lows. Kuroda said that the central bank will contemplate on longer funding operations if they are deemed necessary.
Global stocks dropped 4.2 percent from the highest level reached last May 21 due to speculations that the Federal Reserve would reduce its bond purchases. Stocks are still up 7 percent in 2013. The market has become dependent on monetary stimulus.
The Standard & Poor GSCI index of 24 raw materials dropped 0.7 percent as industrial metals headed the declines yesterday. The Dow Jones Industrial Average dropped 0.8 percent. S&P 500 stock futures had little changes t 1,627.60.
The yen traded at 96.07 a dollar and dropped less than 0.1 percent to 127.90 against the euro. The Australian dollar has increased to 94.48 US cents after reaching the lowest level since September 2010 the previous day. The New Zealand dollar went up 0.2 percent to 78.87 cents.