Tokyo stocks buck Asian rally after BoJ cuts inflation view
Men wait to cross a street in front of an electronic stock indicator in Tokyo, Japan, Wednesday, Jan. 21, 2015. Most Asian stock markets rose Wednesday as investors anticipated European policymakers would soon unleash more stimulus while Chinese shares extended their rebound following a steep plunge at the start of the week. AP PHOTO/SHIZUO KAMBAYASHI
HONG KONG–Tokyo shares fell on Wednesday, countering a broad rally in Asian markets, after the Bank of Japan slashed its inflation forecast and held off fresh easing measures after a two-day meeting.
The yen rose against both the dollar and the euro on the news, however, as traders took solace in the BoJ’s announcement that it was also raising Japan’s growth outlook on signs the economy was rebounding.
Shares in Tokyo’s benchmark Nikkei 225 index closed 0.49 percent lower, falling 85.82 points to 17,280.48. The broader Topix index of all first-section issues was down 0.50 percent, or 7.02 points, to 1,390.61.
Japan was the outlier, however, as a broad rally across Asian markets saw Hong Kong gain 1.68 percent, or 401.42 points, to 24,352.58. Shanghai rose 4.74 percent, or 150.56 points, to 3,323.61 after gaining as much as 5.17 percent in late afternoon trade.
The Shanghai increase was the index’s biggest since October 9, 2009, when it surged 4.76 percent.
Sydney closed 1.62 percent, or 85.73 points, higher at 5,393.4.
Seoul ended up 0.15 percent, gaining 2.92 points to finish at 1,921.23.
“The BoJ’s announcement accelerated profit-taking, which investors were already doing because of sharp gains yesterday,” Hiroaki Hiwada, a Tokyo-based strategist at Toyo Security Co., told Bloomberg News, referencing a 2.07 percent rise on the Nikkei 225 on Tuesday.
The BoJ said inflation for the year starting in April would come in at 1 percent, well down from an earlier 1.7 percent forecast. It said the economy would expand by 2.1 percent, up from its previous expectation of 1.5 percent.
Inflation target
The prices downgrade underscores how the bank’s bid to reach a 2.0 percent inflation target by early next year looks increasingly unlikely. It will fuel speculation that the BoJ will be forced to unleash further stimulus to kickstart the world’s No. 3 economy.
Japan’s monetary policy announcement comes ahead of another much-anticipated meeting of the European Central Bank (ECB) on Thursday.
Experts broadly expect the ECB to announce a bond-buying scheme aimed at kickstarting lending in the struggling eurozone.
The improved growth outlook pushed the yen higher, to 117.88 against the dollar compared with 118.82 a day earlier. It was at 136.40 to the euro compared to 137.24.
The euro, meanwhile, fetched $1.1572 compared with $1.1550 in London.
Hong Kong and Shanghai stocks rallied, with investors in mainland China taking advantage of a sharp decline earlier in the week to snap up heavyweight financial stocks.
The Shanghai market started to recover Tuesday on better-than-expected economic growth figures and comments by the market regulator, which denied that an ongoing crackdown on margin trading aimed to “suppress” a rally that sent the Shanghai market up more than 50 percent in 2014.
On Monday the Shanghai index had tumbled 7.70 percent, its biggest fall since June 2008, after authorities last week moved to rein in risky margin trading business by punishing 12 brokerages for breaching rules.
“It looks like some new investors are taking advantage of the big decline on Monday to buy,” Wang Zheng, chief investment officer at Jingxi Investment Management Co., told Bloomberg News.
“The market over-reacted to the news of a crackdown on margin trading.”
Oil prices moved higher. The US benchmark, West Texas Intermediate for March delivery, climbed 44 cents to $46.91 while Brent crude for March rose 60 cents to $48.59.
Gold fetched $1,300.64 an ounce, against $1,291.31 late Tuesday.
In other markets:
— Mumbai advanced 0.36 percent, or 104.19 points, to end at 28,888.86 points.
Hindustan Unilever rose 4.99 percent to 940.40 rupees, while diversified conglomerate ITC fell 5.01 percent to 352.60 rupees.
— Bangkok closed up 0.15 percent, or 2.27 points, to 1,537.36.
Construction company CH. Karnchang rose 3.88 percent to 26.75 baht, while telecoms firm True Corporation added 2.42 percent to 12.70 baht.
— Jakarta closed up 0.95 percent, or 49.18 points, to 5,215.27.
Auto maker Astra International rose 3.02 percent to 7,675 rupiah and cigarette maker Gudang Garam fell 5.31 percent to 53,025 rupiah.
— Malaysia’s main stock index added 1.14 percent , or 19.98 points, to end at 1,770.09.
Tenaga Nasional gained 0.69 percent to 14.50 ringgit, Telekom Malaysia rose 0.15 percent to 6.69 while Public Bank eased 0.11 percent to 17.74 ringgit.
— Singapore finished up 0.61 percent, or 20.44 points, to 3,354.46.
Singapore Airlines rose 3.65 percent to Sg$12.49, while DBS bank finished up 0.40 percent at Sg$20.00.
— Taipei added 0.74 percent, or 68.02 points, to 9,319.71.
Taiwan Semiconductor Manufacturing Co. Ltd. rose 2.17 percent to Tw$141.00.
— Manila closed 0.29 percent higher, or 21.29 points, at 7,474.10.
Top-traded Metropolitan Bank and Trust Co. gained 2.42 percent to 93.10 pesos.
— Wellington rose 0.70 percent, or 39.64 points, to 5,672.85.
Fletcher Building gained 4.47 percent at NZ$8.42 while Spark was down 1.95 percent at NZ$3.275
