FTSE 100 Live: Bank of Japan policy shift hits Asia technology stocks

(Evening Standard)

Shares in Tokyo have fallen sharply after an unexpected move by the Bank of Japan signalled the beginning of the end for the country’s ultra loose monetary policy.

The bank kept its benchmark interest rate unchanged but increased the upper limit of its tolerance band on 10-year government bonds to 0.5% from 0.25%.

The move took Asia markets by surprise, with the Nikkei 225 down 2.5% by the close and leading technology stocks off by as much as 5%.

FTSE 100 set to fall after BoJ move

07:46 , Michael Hunter

European markets are set for a weak session after the Bank of Japan surprised markets with an unexpected tweak to its monetary policy settings.

CMC Markets expects the FTSE 100 index to open 60 points lower at 7301, a performance not helped by the impact of Wall Street closing lower for the fourth session in a row last night.

Michael Hewson, CMC’s chief market analyst, said traders had assumed policymakers would wait until early next year before acting.

He added: “It suggests that the Bank of Japan is starting to become concerned about policy lags and inflation becoming more entrenched.

“It also gives them more flexibility in 2023 in the event they need to start applying the brakes to prevent a significant overshoot in inflation, with the potential that we could see a rate hike before the end of next year.”

““We’d like to apologise again to TSB customers who were impacted by issues following the technology migration in 2018. We worked hard to put things right for customers then and have since transformed our business.”

TSB fined almost £50 million for IT meltdown that locked 2 million people out of their accounts

07:38 , Michael Hunter

TSB has been slapped with a fine of almost £50 million for the disastrous systems meltdown that left around two million customers locked out of online banking for weeks in 2018.

The IT collapse occurred when the bank was trying to move customers to a new platform, which had not been tested properly according to a subsequent report. The migration followed a change of ownership — from Lloyds Banking Group to Sabadell, the Spanish group that bought TSB — and during the crisis, TSB turned down an offer of help from its former parent.

Story continues

Today, the Financial Conduct Authority fined TSB £48.6 million “perational risk management and governance failures.” The City watchdog said TSB’s entire branch network and a significant portion of its customer base were affected by the problems and it took the bank until  December 2018 to return to business as usual, with almost £33 million paid to customers in compensation.

The scandal led to the departure of Paul Pester as CEO.

Mark Steward, the FCA’s executive director of enforcement and market oversight, said: ““The failings in this case were widespread and serious which had a real impact on … day-to-day lives.

““The firm failed to plan for the IT migration properly, the governance of the project was insufficiently robust and the firm failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.”

Surprise move by Bank of Japan triggers sell-off

07:23 , Graeme Evans

Technology stocks led a sharp sell off for Tokyo-listed stocks this morning after the Bank of Japan wrong-footed markets with a surprise adjustment in monetary policy.

The bank left interest rates unchanged but announced that Japan’s ten-year yield would now be able to rise to around 0.5%, having been limited to 0.25% previously.

The Nikkei 225 closed 2.5% lower in the wake of the move and other Asia markets also came under pressure.

Deutsche Bank strategist Henry Allen said: “Bank of Japan has decided to adjust its yield-curve-control policy, which is widely seen as the beginning of a potential end to its ultra-loose monetary policy.

“That policy has made them a big outlier compared to other central banks this year, having maintained rates at the zero lower bound whilst others embarked on their biggest tightening cycle in a generation.

“Indeed, it’s important not to underestimate the impact this could have, because tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly.”