Asian Stocks Halt Two-Day Rally as BOJ Disappoints Investors

Asian stocks fell, halting a two-day rally, as a plan by the Bank of Japan to purchase exchange-traded funds left investors disappointed and a slump in oil weighed on energy shares.

The MSCI Asia Pacific Index slipped 0.7 percent to 129.61 as of 4:01 p.m. in Hong Kong, after jumping as much as 0.6 percent after the BOJ announcement. The regional benchmark index pared this week’s gain to less than 0.1 percent, after jumping 3 percent over the previous two days as the U.S. Federal Reserve raised interest rates for the first time in almost a decade.

The BOJ said it will spend an additional 300 billion yen ($ 2.5 billion) for ETF purchases on top of the 3 trillion yen the bank already spends each year. Japan’s Topix index jumped as much as 2 percent on the news, only to drop 1.8 percent at the close as investors took a closer look at the central bank’s plan.

At 300 billion yen, it’s just a 10th of the size of the bank’s current ETF efforts, and intended to offset the market impact as the BOJ resumes selling from April of stocks it purchased from financial institutions.

Friday’s action wasn’t additional monetary easing in response to downside market risks, BOJ Governor Haruhiko Kuroda said at briefing in Tokyo after the two-day meeting. The central bank kept its main target for monetary stimulus unchanged, indicating confidence in the economy after data from capital spending to business confidence and unemployment exceeded expectations.

Source: Bloomberg


Asian Stocks Extend Global Rout as Draghi Disappoints Investors

Asian stocks joined a global selloff as the scale of further stimulus by the European Central Bank disappointed some investors.

The MSCI Asia Pacific Index dropped 0.7 percent to 132.63 as of 9:03 a.m. in Tokyo, with 496 stocks retreating while just 17 rose. U.S. stocks fell the most in two months while European equities tumbled after ECB President Mario Draghi announced an deposit-rate cut and bond-buying extension that fell short of what some traders had envisaged. Meanwhile, Federal Reserve Chair Janet Yellen indicated the conditions for higher rates in the U.S. had been met, boosting the odds the central bank will raise borrowing costs this month ahead of a jobs report on Friday.

The ECB’s additional easing “is about 60 percent of what was hoped for,” Mitsuo Shimizu, deputy general manager at Japan Asia Securities Group Ltd. in Tokyo, said by phone. “The market was hoping for some Draghi magic, but instead we got a Draghi shock”.

Source: Bloomberg