Asia stocks hit as Bank of Japan frustrates
- The yen soared yesterday as the Bank of Japan’s small adjustments to its stimulus programme disappointed traders who had expected a huge boost to its arsenal.
Although Japan’s Nikkei index ended higher, with financials cheered that the bank did not cut borrowing costs further into negative territory, most other regional markets retreated.
After weeks of anticipation that the central bank would pump fresh cash into the economy, policymakers said only that they would boost its exposure to riskier investments, leaving a massive 80 trillion yen annual asset-buying programme unchanged. “The BOJ decision failed to meet the market’s high expectations,” Khoon Goh, head of Asia research at Australia & New Zealand Banking Group in Singapore, told Bloomberg News.
He added that while governor Haruhiko Kuroda indicated the bank could unveil fresh measures at its September meeting, “overall this is a huge disappointment for markets”.
The news sent the dollar tumbling to below 103 yen at one point from 104.20 yen earlier in the day, and well off the levels above 107 yen touched last week. In the afternoon it was at 103.50 yen, while the euro bought 114.51 yen from 116.60 yen.
The Nikkei stock index sank almost two percent at one point but bounced back to end 0.6 percent higher. Among other markets Seoul sank 0.2 percent and Hong Kong was off 1.3 percent while Shanghai ended 0.5 percent down. Singapore tumbled 1.5 percent but Sydney was up 0.1 percent. In early European trade London fell 0.1 percent but Frankfurt rose 0.5 percent and Paris added 0.2 percent. The BOJ announcement came days after the government in Tokyo launched a fresh programme worth 28 trillion yen to kickstart the Japanese economy.
THE NEWS SENT THE DOLLAR TUMBLING TO BELOW 103 YEN AT ONE POINT FROM 104.20 YEN EARLIER IN THE DAY