US and Japan data on tap for Tokyo investors

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TOKYO: A slew of US and Japanese data to be released in the coming days will be key trading cues for Tokyo investors after both countries’ central banks rolled out fresh policy moves last week.

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Last Friday, the Bank of Japan (BoJ) announced surprise tweaks to its huge stimulus plan, jolting financial markets and pushing the yen into a brief dive, as Japan’s economy struggles to mount a recovery.

The decision came after the Federal Reserve hiked interest rates for the first time in almost a decade on the back of a firm US economy.

The moves highlighted a growing divergence in monetary policy between the US central bank and its overseas counterparts.

This week, investors will be keeping an eye on some key US data, including economic growth figures and existing US homes sales, after the Fed rate move boosted hopes the world’s top economy was back on track.

“Investors are keen to confirm the health of the US housing market,” Nomura Securities said in a commentary.

In Japan, markets will be looking at inflation, jobs and spending data later in the week after the BoJ tweaked its massive stimulus plan Friday.

Among the moves, the bank said it would boost its holdings in firms dedicated to capital spending and new hiring.

They also made some other tweaks —including hiking the bank’s exposure to longer-term bonds—after wrapping up their last policy meeting of the year.

The announcement comes as analysts raise concerns the BoJ would struggle to scoop up enough bonds under its 80 trillion yen ($654 billion) annual asset-buying scheme—which effectively prints money to spur lending.

BoJ chief Haruhiko Kuroda said the measures announced Friday were designed to beef up the impact of the bank’s monetary easing on the economy.

The benchmark Nikkei 225 index briefly rallied more than two percent—it was in negative territory during morning trade —as the yen sharply weakened, boosting exporters.

But the jump quickly faded and the Nikkei fell 1.90 percent, or 366.76 points, to close at 18,986.80. It lost 1.27 percent over the week.

The broader Topix index of all first-section shares dropped 1.76 percent, or 27.61 points, to 1,537.10. It was down 0.80 percent this week.

“Investors thought that the impact of the (BoJ) measures was likely to be limited,” IwaiCosmo Securities broker Toshikazu Horiuchi told Agence France-Presse.

“But at least it’s true that the Bank of Japan still intends to sustain the economy with abundant cash, which marks a sharp contrast to the Fed.”

AFP

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