Asia stocks stut­ter but Tokyo soars on stim­u­lus

The Myanmar Times - - International Business -

JA­PANESE and Euro­pean shares soared yes­ter­day after Tokyo launched a mas­sive stim­u­lus pack­age to kick­start the econ­omy, but other Asian mar­kets were more sub­dued as the Fed­eral Re­serve wraps up a key pol­icy meet­ing.

Prime Min­is­ter Shinzo Abe unveiled the 28 tril­lion yen (US$266 bil­lion) pro­gram days be­fore the Bank of Ja­pan holds its own meet­ing that is widely ex­pected to see it loosen mone­tary pol­icy.

Mr Abe had promised to ramp up spend­ing on the stut­ter­ing econ­omy fol­low­ing Bri­tain’s shock vote to leave the Euro­pean Union and a landslide par­lia­men­tary elec­tion win ear­lier this month that bol­stered his power.

Prom­ises of sup­port from gov­ern­ments and cen­tral banks around the world since the Brexit bal­lot last month have pro­vided the foun­da­tion for big gains across eq­ui­ties mar­kets in re­cent weeks.

“It seems big and it should prob­a­bly do quite a bit for the Ja­panese econ­omy. Whether it’s big enough, we’ll find out. The mar­kets seem to be a lit­tle bit un­de­cided whether it is or it isn’t,” Lothar Men­tel, chief in­vest­ment of­fi­cer at Tat­ton In­vest­ment Man­age­ment, told Bloomberg TV.

Tokyo stocks ended the day 1.7 per­cent higher while the dol­lar rose to 105.70 yen from 104.64.

The BoJ ends its gath­er­ing on July 29 and is widely tipped to un­veil fresh stim­u­lus as the world’s num­ber-three econ­omy strug­gles and in­fla­tion is vir­tu­ally non-ex­is­tent.

But while ex­pec­ta­tions of new mea­sures have boosted Ja­panese stocks and sent the yen tum­bling – help­ing ex­porters – an­a­lysts warned of a sharp sell-off if pol­i­cy­mak­ers dis­ap­point.

“The key is whether the BoJ will sur­prise us again on Fri­day,” said Alex Wong, di­rec­tor of as­set man­age­ment at Am­ple Cap­i­tal in Hong Kong.

“It has sur­prised the mar­ket sev­eral times in the past few years so they are a lit­tle bit un­pre­dictable. There may be a dis­ap­point­ment” if the BoJ fails to de­liver ex­tra stim­u­lus, he added.

The im­me­di­ate fo­cus is now on the Fed, which ended its meet­ing late last night. While it is not ex­pected to an­nounce any new pol­icy mea­sures, deal­ers are keen to see its ap­praisal of the US econ­omy and plans for in­ter­est rates in light of a string of pos­i­tive data, in­clud­ing on jobs.

“In all like­li­hood, the Fed may take a cau­tious stance high­light­ing Brexit con­cerns, but there is cer­tainly some scope for [it] to lean hawk­ish,” said Stephen Innes, se­nior trader at OANDA Asia Pa­cific. “If not for Brexit and an out­lier May [jobs re­port], the Fed may very well have pulled the trig­ger [in June].

“Since then, em­ploy­ment data has re­cov­ered and the US eco­nomic prints con­tinue to beat ex­pec­ta­tions, pro­vid­ing the [Fed] with more than enough am­mu­ni­tion to pro­vide some straight for­ward guid­ance of an im­pend­ing rate hike.”

While the Nikkei soared, other mar­kets stut­tered. Hong Kong ended 0.4pc up and Syd­ney was marginally higher. Seoul and Welling­ton each dipped 0.1pc.

Shang­hai tum­bled 1.9pc fol­low­ing a re­port that China’s bank­ing reg­u­la­tor was con­sid­er­ing clamp­ing down on the na­tion’s multi-tril­lion­dol­lar wealth man­age­ment prod­ucts mar­ket.

The 21st Cen­tury Busi­ness Her­ald said among mea­sures be­ing con­sid­ered by the China Bank­ing Reg­u­la­tory Com­mis­sion were lim­its on eq­ui­ties in­vest­ments. –

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