Yen climbs after the nation’s central bank move 

Yen climbs, Oil Slumps Before India Rates Decision

• Japan currency reverses loss as BOJ offers to buy bonds
• Energy shares decline as crude falls for third straight day

The yen rose after the nation’s central bank offered to buy bonds for the third time in a week, while crude oil extended the worst two-day slump in four weeks. India’s Sensex was little changed ahead of a central bank rates decision.

The yen advanced as the Bank of Japan’s move to buy bonds maturing in five-to-10 years highlighted concerns about the durability of Governor Haruhiko Kuroda’s massive quantitative easing. Energy companies fell the most in the MSCI Asia Pacific Index, as crude tumbled for a third day on concern U.S. inventories are increasing. Copper led metals higher as workers at the world’s largest copper mine vowed to start a strike. Economists expect the Reserve Bank of India will cut interest rates that are already at a six-year low.

The MSCI All-World Country Index of shares has stalled about 2 percent shy of the record high reached in 2015 as investors look for more details from the Trump administration on promised spending increases and tax cuts, at the same time that data continue to paint a mixed picture on the pace of inflation in developed markets. Currencies fluctuated overnight as political concerns sent the euro sliding.

“The market is likely to move sideways until there is more clarity on Trump policies,” said Alan Richardson, a Hong Kong-based investment manager at Samsung Asset Management. “Oil’s upside is capped by supply risks and it’s unlikely to see strong earnings in the energy sector.”

The BOJ bond purchases this week bring Kuroda closer to when he runs out of easily sale-able securities to buy. The stepped-up purchases were needed to stop 10-year yields from becoming unhinged from the BOJ’s target of around zero percent. The operations showcase how the central bank’s shift to targeting the yield curve hasn’t removed questions about the durability of its quantitative easing.

What’s coming up in the markets:

• China provides an update on balance of payments data.
• Earnings season continues, with SoftBank Group Corp. scheduled to report in Tokyo later on Wednesday.
• Japanese Prime Minister Shinzo Abe meets with U.S. President Donald Trump later this week.

Here are the main market moves:

Stocks

• The MSCI Asia Pacific Index was little changed at 2:09 p.m. in Tokyo, with energy companies in the gauge dropping 0.7 percent for the biggest loss. The regional equities measure remains near its highest level since July 2015.
• The Topix was up 0.2 percent, recovering after erasing earlier gains on the BOJ’s move.
• South Korea’s Kospi Index fell 0.6 percent as Samsung Electronics Co. declined 1.1 percent. Australia’s S&P/ASX 200 Index rose 0.5 percent and New Zealand’s benchmark was flat.
• Hong Kong’s Hang Seng Index slumped 0.1 percent, while the Shanghai Composite Index lost 0.3 percent.
• Futures on the S&P 500 fell 0.1 percent, after the gauge rose less than a point Tuesday in New York. The Dow Jones Industrial Average touched an all-time high before the rally faded as oil majors slumped.

Currencies

• The yen rose the most among major currencies against the dollar, climbing 0.1 percent to 112.26 per dollar, after falling 0.1 percent earlier. The currency slid 0.6 percent the previous session.
• The Bloomberg Dollar Spot Index rose 0.1 percent after a two-day gain of 0.5 percent. The currency is still down 3.1 percent from a Jan. 3 peak.

Commodities

• Oil slid 1.1 percent to $51.58 a barrel in New York, heading for a third-straight drop of more than 1 percent. An industry report was said to show that U.S. crude and gasoline supplies climbed.
• Copper three-month forwards jumped 1.3 percent in London. Workers at the world’s biggest copper mine vowed to start an indefinite strike Thursday as talks with BHP Billiton Ltd. failed to produce an agreement following weeks of collective bargaining in Chile.

Bonds

• Australian 10-year bonds yields dropped one basis point to 2.69 percent, while those in New Zealand declined five basis points to 3.25 percent.
• Yields on 10-year Treasuries slid one basis point to 2.39 percent, after falling below 2.40 percent for the first time in two weeks on Tuesday.

Source: Bloomberg – Yen Climbs, Oil Slumps Before India Rates Decision: Markets Wrap

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