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IPFS News Link • Japan

Global Stocks Plunge After Bank Of Japan "Shock"

• http://www.zerohedge.com

It is very fitting that on today's April 28th anniversary of the bull market, the day that officially makes this the second-longest "bull market" in history, the market got a stark reminder of just how it got there: through constant and relentless central bank intervention, which has been "beneficial" to stocks for the most part, however last night was anything but.

Less than one week after the BOJ floated a trial balloon using Bloomberg, that it would reduce the rate it charged some banks which set off the biggest USDJPY rally since October 2014, we are back where we started following last night's "completely unexpected" (for everyone else: we wrote "What If The BOJ Disappoints Tonight: How To Trade It" hours before said "shock") shocking announcement out of the BOJ which did absolutely... nothing.

"It's a total shock," Nader Naeimi, Sydney- based head of dynamic markets at AMP Capital Investors told Bloomberg. "From currencies to equities to everything -- you can see the reaction in the markets. I can't believe this. It's very disappointing."

As we reported last night, the yen surged the most in 8 months, or since August's market meltdown and Japanese equities plunged after the Bank of Japan refrained from adding to its monetary stimulus. Bonds jumped around the world and gold rallied as the Federal Reserve signaled no hurry to raise interest rates. The staggering move as seemingly everyone was caught wrong-footed is shown in the chart below.

As we warned readers in advance of the BOJ announcement, it all started with Goldman which one week before the BOJ announcement changed its "base case" for BOJ easing from June to April, expecting a doubling in ETF purchases, and immediately all the other sellside lemmings followed, assuing everyone would be flatfooted when the BOJ "disappointed." As Bloomberg puts it, "the BOJ's decision was a surprise because a majority of economists surveyed by Bloomberg had predicted some action to counter a strengthening yen that had cast a shadow over the outlook for wage gains and investment spending. That the market's reaction was so violent shows the weight financial markets are attaching to shifts in monetary policy."


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