Asian stocks headed towards their highest levels since May as the Bank of Japan followed measures set by the US Federal Reserve last week and expanded its easing program and boosted asset purchases.
As fears increased over the impact the China – Japan row in the South Seas would have upon its economy, Japan – the world’s third largest economy, took the step of increasing its asset-purchase fund to 55 trillion JPY from 45 trillion JPY whilst its lending facility remained the same at 25 trillion JPY. This came about after the Japanese economy grew at half the rate initially estimated in Q2 and the appreciation in the Yen making it more difficult to export to large but troubled markets such as Europe and the US.
The Fed’s open ended strategy to purchase mortgage backed securities pressured the BOJ to act sooner rather later to stop further appreciation in the Yen. The yen hit a seven month high of 77.13 against the dollar on Sept. 13th, following on from the Fed announcing its plan to buy $40 billion a month of mortgage debt in a third round of quantitative easing. In the last five years the yen has gained about 48%.
Asian trading on Wednesday saw Hong Kong’s Hang Seng Index gain 1.05%, Australia’s S&P/ASX200 rose by 0.35%, whilst Japan’s Nikkei 225 Index increased by 1.64% at time of writing. The JPY was down 0.45% against the USD, trading at 79.17 as the Bank of Japan kept interest rates unchanged at 0.10%
Today’s Outlook
As the markets digest the news from the Bank of Japan, there is much investor focus on what European Central Bank President Draghi will say in his press conference tomorrow. However, there is plenty of data being released today to keep the investors interested with Housing Starts, Building Permits and Existing Home Sales figures all being released in the US with an increase in the number of Housing Starts expected but falls in both Building Permits and existing home sales.
As fears increased over the impact the China – Japan row in the South Seas would have upon its economy, Japan – the world’s third largest economy, took the step of increasing its asset-purchase fund to 55 trillion JPY from 45 trillion JPY whilst its lending facility remained the same at 25 trillion JPY. This came about after the Japanese economy grew at half the rate initially estimated in Q2 and the appreciation in the Yen making it more difficult to export to large but troubled markets such as Europe and the US.
The Fed’s open ended strategy to purchase mortgage backed securities pressured the BOJ to act sooner rather later to stop further appreciation in the Yen. The yen hit a seven month high of 77.13 against the dollar on Sept. 13th, following on from the Fed announcing its plan to buy $40 billion a month of mortgage debt in a third round of quantitative easing. In the last five years the yen has gained about 48%.
Asian trading on Wednesday saw Hong Kong’s Hang Seng Index gain 1.05%, Australia’s S&P/ASX200 rose by 0.35%, whilst Japan’s Nikkei 225 Index increased by 1.64% at time of writing. The JPY was down 0.45% against the USD, trading at 79.17 as the Bank of Japan kept interest rates unchanged at 0.10%
Today’s Outlook
As the markets digest the news from the Bank of Japan, there is much investor focus on what European Central Bank President Draghi will say in his press conference tomorrow. However, there is plenty of data being released today to keep the investors interested with Housing Starts, Building Permits and Existing Home Sales figures all being released in the US with an increase in the number of Housing Starts expected but falls in both Building Permits and existing home sales.