HONG KONG: Japanese stocks surged and the yen tumbled after the country’s central bank adjusted its stimulus programme, providing a healthy start to world markets on what has been dubbed “Big Wednesday”.
The Nikkei sprang from negative territory to rise 1.6 percent in the afternoon, soon after the Bank of Japan said it would aim to raise government bond yields as part of its drive to kickstart inflation.
It also said it would continue its huge monetary easing scheme and held off cutting interest rates further into negative territory — some much-needed relief for banks, who have been hammered by the policy introduced earlier this year.
“The BoJ’s decision to steepen the yield curve showed they are taking into account the situation of financial institutions,” Takeshi Minami, chief economist at Norinchukin Research Institute, told Bloomberg News.
The dollar soared to 102.40 yen from 101.69 yen in the morning, while the euro hit 114.20 yen from 113.50 yen earlier.
The announcement came at the end of a keenly-awaited meeting and follows a string of weak readings on the economy, which has failed to ignite despite three years of bank and government stimulus.
Later in the day the Federal Reserve will wind up its own policy meeting, which analysts are calling the biggest for years.
Global markets have suffered severe volatility in the weeks leading up to the gathering, with Fed officials issuing contradictory opinions on the need for a hike in interest rates.
While it is not expected to tighten this month, the policy board’s statement will be pored over for clues about its plans for its next meeting in December, or January.
Talk of tightening US rates and a lack of easing of late from other central banks has fuelled debate that the age of easy money — which has helped fuel a rally on global markets — could be ending, sparking fears of a painful correction.
The Bank of Japan decision was being carefully watched on Asian trading floors, where Hong Kong rebounded from earlier losses to sit 0.5 percent higher by the break, and Shanghai was flat.
Sydney added 0.7 percent and Seoul gained 0.4 percent, while Taipei put on 0.7 percent.
However, Singapore and Wellington were slightly lower.
Oil prices climbed for second day as traders await the release of US stockpiles data, while also having one eye on next week’s meeting of top producers that will discuss a global supply glut and overproduction.
West Texas Intermediate for November delivery, a new contract, was 78 cents higher at $44.83 and Brent was up 59 cents at $46.47.
News that Libya had finally shipped its first cargo of crude from its Ras Lanouf port since 2014 had little immediate effect on prices. The shipment was meant to have left Sunday but was delayed by unrest.
“The amount of oil coming out of Libya is fairly limited so it won’t have a material impact on crude prices today,” OANDA senior market analyst Jeffrey Halley told AFP.
Tokyo – Nikkei 225: UP 1.2 percent at 16,756.54
Shanghai – Composite: UP 0.57 points at 3,023.57
Hong Kong – Hang Seng: UP 0.5 percent at 23,638.90
Euro/dollar: UP at $1.1152 from $1.1151 late Tuesday
Dollar/yen: DOWN at 102.40 yen from 101.72 yen
Pound/dollar: UP at $1.2999 from $1.2983
New York – DOW: UP 0.1 percent at 18,129.96 (close)
London – FTSE 100: UP 0.3 percent at 6,830.79 (close)
