Asian Markets Cautious Ahead of BOJ Policy Decision
July 28 2016 - 11:30PM
Dow Jones News
Investors were treading cautiously early Friday in Asian markets
ahead of a key Bank of Japan policy decision, with expectations for
aggressive easing running high.
The Nikkei Stock Average fell 0.6% as the yen strengthened
sharply against the U.S. dollar, with the currency pair falling to
as low as 103.30 from 105.20 in early Asia trade. It was last at
103.974.
"It all depends on what the BOJ does today," said Tim Condon,
ING's chief Asia economist. "If they surpass expectations and the
yen depreciates it's risk on, which is bullish for all Asian equity
markets and currencies. If they disappoint, it's bearish for
equities and currencies."
Data released Friday showed that Japan inflation stayed far
below the Bank of Japan's 2% target. Consumer prices fell at the
fastest pace since June 2013, adding to BOJ pressures to announce
easing later Friday.
"A very ugly setting was presented for [BOJ Gov. Haruhiko]
Kuroda to make his BOJ policy statement today as…Japan's inflation
reading came in at its fourth consecutive deflationary read," said
Gavin Parry, managing director at Parry International Trading.
Meanwhile, Japan's unemployment rate fell to 3.1% in June from
3.2% the previous month.
Elsewhere in the region, Australia's S&P ASX/200 was trading
0.1% lower, while the Seoul Kospi was up 0.3%. Hong Kong's Hang
Seng Index fell 0.7%, and the Shanghai Composite was trading up
0.1%. In Taiwan, the Taiex was down 0.7%, giving up the previous
day's gains in the shares of mobile phone component makers,
triggered by strong earnings from Samsung Electronics Co. Ltd. and
Apple Inc. earlier in the week.
Other Asian currencies were also appreciating on Friday. The
South Korean won opened at a nine-month high versus the dollar,
tracking the yen's strengthening to a two-week high.
Analysts say BOJ expectations are sky high, meaning the Asian
markets and, in particular, the yen, could react sharply on even
the slightest disappointment.
Conversely, BOJ's Mr. Kuroda is known for his surprises, and
markets may take off on word of some extraordinary measure.
In the oil markets, the price of Brent crude slightly recovered
in Asia trade to trade up 0.1%.
Eleanor Warnock and Ewen Chew contributed to this article.
Write to Kenan Machado at kenan.machado@wsj.com and Ese
Erheriene at ese.erheriene@wsj.com
(END) Dow Jones Newswires
July 28, 2016 23:15 ET (03:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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