European stocks open higher following Bank of Japan action; Fed in focus

European stocks opened higher Wednesday after the Bank of Japan announced new monetary policy measures and as investors awaited the outcome of the U.S. Federal Reserve’s meeting.

The pan-European STOXX 600 was up 0.91 percent.

Ahead of the European market open, the Bank of Japan announced that it was abandoning its target to increase the monetary base, launching yield curve controls and scrapping its bond buying range – but it left rates unchanged.

The Nikkei and Topix rallied following the announcement, while the 10-year Japanese government bond yield rose into positive territory for the first time since March.

There had been concerns that the Japanese central bank could cut interest rates further into negative territory, while reducing its long-term government bond purchases in a bid to steepen the yield curve to mitigate the costs of negative rates.

Later on Wednesday, the U.S. Federal Reserve will become the focus for market attention although no fireworks are expected from the central bank this month. Market odds of a rate hike for the September meeting were just about 20 percent Tuesday, and close to 60 percent for December.

The Fed releases its statement and new projections for interest rates and the economy at 2 p.m. EDT (19:00pm London time) Fed Chair Janet Yellen will then brief the media at 2:30 p.m. EDT.

In other news, the chief executive of Wells Fargo, John Stumpf, was accused of ‘gutless leadership’ when he was grilled in Congress over phantom customer accounts. Speculation is growing that Warren Buffett could abandon his investment in the bank.

Source: CNBC