BackAsian stocks jump after BoJ surprise; gold retreats
The yen tumbled 1.5% to 110.84 per dollar, the weakest since January 2008
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Hong Kong: The yen plunged to a six-year low while shares in Tokyo jumped the most in a year as the Bank of Japan (BoJ) unexpectedly increased its target for monetary expansion. US equity-index futures surged, gold fell below $1,200 an ounce and oil extended losses.
The yen tumbled 1.5% to 110.84 per dollar by 2:45pm in Tokyo, the weakest since January 2008. The Topix index surged as much as 4.4%, while the Nikkei 225 Stock Average hit its highest level since 2007. Standard & Poor’s 500 Index futures added 0.9%. Japanese government bonds rose. Oil fell for a second day after US production surged to the highest level since the 1980s. Gold was headed for its biggest weekly drop since May.
The BoJ said it will increase holdings of government bonds by ¥80 trillion ($723 billion) and boost exchange-traded fund purchases to ¥3 trillion. Japanese stocks were already rallying on speculation the country’s public pension fund is set to announce a boost it equity holdings. The US economy capped its best six months of growth in a decade last quarter, supporting the Federal Reserve’s decision to bring its bond- buying program to an end this month.
“Today you’re getting a double boost with talk of the GPIF increasing it’s shares allocation and the BOJ pumping more cash in at a faster rate," Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd which manages about $125 billion, said by phone. “It had become increasingly apparent that what the BoJ was doing wasn’t enough and they needed to do more and it’s always been a question of when they would do that. It’s an excellent outcome."
Narrow vote
In the first policy change since governor Haruhiko Kuroda began record asset purchases in April last year, the BoJ boosted its target for expanding the monetary base to 80 trillion yen from ¥60 to 70 trillion before, according to a statement in Tokyo on Friday. The board was split 5 to 4 on the decision. Only 3 of 32 economists surveyed by Bloomberg News forecast the BoJ would expand stimulus today.
The Topix’s gain today took its advance this week to 6.8%, the most since the five days ended 12 April last year, a week after the BoJ unveiled its stimulus programme.
The announcement sent stocks higher across Asia, with the Hang Seng Index adding 1.2% in Hong Kong and Australia’s S&P/ASX 200 Index climbing 0.9%. India’s S&P BSE Sensex Index, which closed at an all-time high yesterday, jumped 1.1%.
Equity-index futures in the UK and US also advanced on the prospects for further stimulus. Contracts on the Nasdaq 100 Index climbed 1.1% and those on the Dow Jones Industrial Average added 1%, while futures on London’s FTSE 100 Index added 1.2%.
Crude, gold
West Texas Intermediate oil lost 0.4% to $80.77 a barrel, after falling 1.3% last session from a one-week high. A report yesterday showed US crude production surged to the highest level since the 1980s.
WTI has slumped 11% in October, on track for its biggest monthly retreat since May 2012 amid concern global oil supply is outpacing demand. Brent dropped 0.4% to $85.87 per barrel today after losing 1% on Thursday.
Gold retreated 0.7% to $1,190.09, the lowest intraday level since 6 October. Silver plunged 1.6% to $16.2236, a more-than four year low.
One-month non-deliverable forwards on Russia’s ruble strengthened 0.1% to 41.8309 per dollar, after the currency’s surge of as much as 5.1% on Thursday, a record gain, according to Moscow Exchange data. Russia’s central bank will probably increase its key rate for the fourth time this year today, according to a Bloomberg survey, as policy makers seek to half a run on the currency that’s fueling inflation. Bloomberg
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