HONG KONG: Japanese stocks rallied again Monday following another Wall Street record as dealers look ahead to central bank meetings in Japan and the United States but other Asian markets struggled after racking up healthy recent gains.
The bank policymakers’ gatherings are the first since last month’s shock vote in Britain to leave the European Union, which led to promises around the world to provide support to financial markets.
The pledges have fanned a surge across global equities markets, with the Dow and S&P 500 in New York both enjoying a series of records, while strong US data has also boosted the dollar as talk of another interest rate hike resurfaces.
The Bank of Japan is widely expected to ramp up its stimulus to kickstart the struggling economy, although hoped-for helicopter money — the direct injection of cash into the economy such as people’s bank accounts — is not expected to feature.
Before that, the Federal Reserve will have its meeting, at which is is tipped to hold rates, but traders will be hoping for some forward guidance on its policy plans.
“Investors are placing a lot of faith in central banks and fiscal authorities to increase stimulus and improve the growth calculus,” Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney, said in an e-mail to clients.
“Equity valuations are stretched but unlike bonds they are not yet at historic extremes and given that it has historically taken three rate hikes to burst equity asset bubbles, share prices should remain elevated for a while yet.”
Tokyo’s Nikkei ended the morning 0.4 percent higher with exporters helped by a pick-up in the dollar to 106.64 yen from 106.19 yen. Traders are also awaiting the start of Japan’s earnings season.
Nintendo plunged 17 percent on the broader Topix index after it warned that the Pokemon Go phenomenon sweeping the world would not translate into bumper profits.
By the end of last week the firm’s share price had doubled in July — making it more valuable than Sony at one point — as the game proved a global hit.
But the Kyoto-based company warned in a statement late Friday that the impact of the game’s success on its bottom line would be “limited” as it was developed by a US firm.
That means Nintendo’s affiliate, Pokemon Company — of which it own a one-third stake — would get only licensing fees.
Among other markets Hong Kong was down 0.2 percent, Seoul slipped 0.1 percent and Singapore eased 0.3 percent, while Shanghai added 0.3 percent and Sydney put on 0.6 percent.
On forex markets the pound eased to $1.3110 from $1.3112, having tumbled Friday following data indicating British manufacturing activity had shrunk in July, fueling worries the economy is contracting after the June 23 vote to leave the EU.
Key figures at 0230 GMT
Tokyo – Nikkei 225: UP 0.4 percent at 16,690.60 (break)
Hong Kong – Hang Seng: DOWN 0.2 percent at 21,913.56
Shanghai – Composite: UP 0.3 percent at 3,021.22
Euro/dollar: DOWN at $1.0954 from $1.0976
Pound/dollar: DOWN at $1.3110 from $1.3112
Dollar/yen: UP at 106.64 yen from 106.19 yen
New York – DOW: UP 0.3 percent at 18,570.85 (close)
London – FTSE 100: UP 0.5 percent at 6,730.48 (close)