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.