NEW YORK (TheStreet) -- U.S. stock index futures are sharply higher in pre-market trading on Friday after the Bank of Japan unexpectedly announced that it is adopting a negative interest rate strategy that is scheduled to take effect on Feb. 16.
Global bond prices spiked following the announcement, which came just days after officials at the bank said that they were not considering such a move. The central bank voted five to four in favor of putting an interest rate of minus 0.1% which, according to various reports, will apply only to new reserves deposited by commercial banks with the central bank. The move is expected to give an extra boost to an already flourishing bond market in the U.S. and U.K.
The move also spurred stock markets around the world into positive territory. Japan's Nikkei rose 2.8% today. The Hang Seng in Hong Kong finished up 2.66%, and the Shanghai Composite Index closed trading up 3.09%.
In Europe, the DAX in Germany is up 0.6%, France's CAC 40 is up 0.88% and the FTSE 100 in the U.K. is up 1.18% with about three hours left in trading today.
On the U.S. economic front, the U.S. Commerce Department released data today showing that the U.S. fourth quarter GDP rose 0.7%, short of the 0.8% rise analysts were expecting for the period.
In U.S. securities news, Xerox (XRX) announced that it will split into two publicly traded companies just two months after activist investor Carl Icahn made his 8.13% stake in the company public. Despite the timing, Xerox CEO Ursula Burns said that the decision was made independent of any influence from Icahn. Xerox will now be divided into a business process outsourcing operation and a document technology company. Xerox's shares have fallen more than 30% over the past 12 months.
Video game manufacturer Electronic Arts (EA) continues to fall in pre-market trading on Friday despite topping analysts' fourth quarter earnings expectations, reporting a 26.3% revenue increase in the holiday quarter and raising its full-year profit and sales forecasts. EA now sees full-year adjusted revenue of about $4.52 billion versus its earlier $4.5 billion prediction. It also now expects to report a full-year EPS of $3.04 per share vs. its previous view of $3 per share.
Microsoft (MSFT) is gaining pre-market after the company beat analyst estimates, reporting a quarterly profit of $0.78 per share that topped analyst expectations of $0.71 per share. The electronics manufacturer reported $25.69 billion in revenue, slightly ahead of the $25.26 billion analysts expected.
Today is an unusually busy Friday for financial releases as we remain in the thick of earnings season. The aforementioned Xerox topped analyst estimates by earning $0.32 per share in the latest quarter. Growth Seeker holding Amazon (AMZN) widely missed analysts' forecast for the fourth quarter. The company reported a profit of $1 per share versus analysts' $1.56 per share expectations. American Airlines Group (AAL) also beat analysts' bottom line expectations, reporting a profit of $2 per share.
Finally, looking ahead to Monday, Alphabet (GOOGL) said that it will separate out the results of its Google unit from its other businesses when it releases its earnings results next week.
- The Bank of Japan introduced negative interest rates for the first time, sending global stocks surging. In a 5-4 vote, the central bank decided to charge 0.1% interest on current accounts that financial institutions hold at the BoJ. However, the measure will only apply to new reserves, meaning it is milder than negative interest rates charged by European central banks.
- Yields on French and German government bonds dropped to fresh negative lows after the Bank of Japan's move, the Financial Times writes. The German two-year yield was down two basis points (or 0.02 percentage points) to a new low of minus 0.48%, while the French two-year yield also dropped two basis points to a new low of minus 0.4%.
- Economic growth slowed in France in the last quarter of 2015, with GDP advancing by 0.2% vs. an advance of 0.3% in the third quarter. For the whole year, GDP expanded by 1.1%. But investment by businesses jumped by 1.3% in the period, reaching levels not seen since the first quarter of 2008, before the financial crisis that started in the U.S. reached Europe.
- Spain's economy grew by 0.8% in the fourth quarter, steady from the third quarter and adding to hopes that the country's recovery has momentum. Growth was 3.2% in 2015 as a whole, the fastest pace of expansion since the crisis hit eight years ago.
- Brazil announced a stimulus worth around $20 billion from state-owned banks to help areas hit by recession, with some analysis fearing a reversal of austerity policies set in place to deal with a bulging deficit. But finance minister Nelson Barbosa said the money will be collected from other areas of the economy, with no cost to the Treasury.