Asia shares edge up on brightening US prospects, BOJ awaited
Japanese stocks soared 4.8 percent to their highest close since November 2007 and the yen skidded to near seven-year lows against the dollar on Friday, after the Bank of Japansurprised markets with fresh easing steps it called a pre-emptive move to stoke inflation.
The Nikkei stock average marked its biggest one-day gain since June 2013 after Japan’s central bank said it would purchase more shares of exchange-traded funds and real estate investment trusts, extend the duration of its portfolio of Japanese government bonds, and increase the pace at which it expands base money to “pre-empt manifestation” of risks.
“It was a total surprise that the BOJ eased further at this time given that BOJ executives have not voiced such pessimistic views lately. The move was apparently made in response to underlying weakness in prices,” said Junko Nishioka, chief economist at RBS Securities Japan.
“I think the move will be effective as it prompted a sharp drop in the yen. That will help boost import prices, which will in turn help bring inflation closer to the BOJ’s target,” she said.
BOJ Governor Haruhiko Kuroda told reporters on Friday that there was still room for further easing if needed, but the central bank believed Friday’s steps were sufficient.
Before the BOJ’s surprise, markets were cheered by Wall Street’s surge late in Thursday’s session after news of surprisingly strong third-quarter U.S. economic growth as the trade gap narrowed. But domestic demand slipped, hinting at some loss of momentum.
But data released before the market open showed Japan’s jobless rate rose in September and the availability of jobs fell for the first time in more than three years, suggesting the labor market is starting to lose some momentum. Japanese household spending also fell more than expected in September.
Source: Reuters-Asia shares edge up on brightening US prospects, BOJ awaited
