The Nikkei 225 Stock Average jumped the most in three weeks, the yen fell against 13 of the 16 most- traded currencies and government bonds rallied after the Bank of Japan cut benchmark interest rates and pledged to buy 5 trillion ($60 billion) of assets. Asian stocks pared losses.
The Nikkei 225 climbed 1.5 percent, erasing a 0.5 percent decline, to 9,518.76 as of 4 p.m. in Tokyo. The yen dropped to 83.68 per dollar from 83.36 in New York. Japanese 10-year bond yields fell to a six-week low. The MSCI Asia Pacific Index sank 0.2 percent. Standard & Poor’s 500 Index futures lost less than 0.1 percent. The Stoxx Europe 600 decreased 0.2 percent to 257.36 as Moody’s Investors Service placed Ireland’s debt ratings on review for possible downgrade.
The Bank of Japan’s decision to create a fund to buy bonds and other assets comes as policy makers in the U.S. and the U.K. consider similar steps to support their flagging economies. At the same time, governments in emerging markets from Brazil to South Korea are increasing currency controls as investment inflows threaten export growth.
“We’re looking to high-growth economies in both fixed and equity space,” Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said on Bloomberg Television’s “Surveillance Midday” with Tom Keene. Pimco’s “new normal” thesis “suggests low growth in the developed economies and higher growth in the developing economies.”
Five stocks advanced for every four that fell on the MSCI Asia Pacific Index, which gained 0.7 percent in the past two days. Australia’s S&P/ASX 200 Index dropped 0.4 percent after the central bank signaled it will raise interest rates as it left its overnight cash-rate target unchanged.
BOJ Pledges
Japan’s Topix Index climbed 1.2 percent, rallying from a 0.7 percent drop as the central bank’s pledges today raised optimism that the yen will weaken, bolstering the value of overseas sales at the country’s biggest exporters.
The Bank of Japan said its fund will buy government bonds and other assets. The central bank also lowered the benchmark interest rate to a range of zero percent to 0.1 percent from the previous 0.1 percent target. Fourteen of 17 economists surveyed by Bloomberg News had instead predicted the BOJ would expand a bank-loan program.
“This shows a commitment by the Japanese authorities to do whatever they can at their disposal to not allow the yen to appreciate anymore and provide liquidity,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages $85 billion. “Any measure to increase liquidity or loosen monetary situation is a step in the right direction.”
Sony, Toyota
Sony Corp., the maker of Bravia televisions, jumped 1.4 percent. Fanuc Ltd., Japan’s largest industrial robot maker, gained 2 percent. Toyota Motor Corp., the world’s biggest carmaker, gained 0.4 percent after falling as much as 1.5 percent earlier.
The yen was set for its biggest daily decline against the dollar since Sept. 15. Japan’s currency fell to 114.71 per euro from 114.08.
“The BOJ action came as a surprise because I had expected they wouldn’t cut rates before the Federal Reserve,” said Junichi Makino, a senior economist at Daiwa Institute of Research Ltd. in Tokyo. “The BOJ moved to back up intervention efforts by the government.”
The yield on the benchmark 10-year bond fell three basis points to 0.905 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price rose 0.276 yen to 100.867 yen. The yield dropped to as low as 0.895 percent, the least since Aug. 25.
Raw Materials
Raw-material companies fell the most among the MSCI Asia Pacific Index’s 10 industry groups as metal prices declined. BHP Billiton Ltd., the world’s biggest mining company, lost 1.3 percent in Sydney. Rio Tinto Group, the world’s third-largest mining company, sank 1.4 percent.
Copper slid 0.4 percent to $8,035 a metric ton in London, while aluminum sank 1.1 percent. Copper futures sank 0.7 percent yesterday in New York, the biggest loss since Sept. 10. Oil for November delivery declined 0.3 percent to $81.25 a barrel.
Alumina Ltd., which has a venture with Alcoa Inc., dropped 1.1 percent after Deutsche Bank AG put Alcoa on its short-term “sell” list. Alcoa, the largest U.S. aluminum company, unofficially starts the U.S. earnings season on Oct. 7.
Hankook Tire Co. slumped 4.4 percent in Seoul after Nomura Holdings Inc. lowered its rating on South Korea’s biggest tire maker to “neutral” from “buy,” citing recent gains in the shares and higher natural rubber prices.
Government Intervention
Taiwan’s dollar advanced for a fifth day before a government report this week that may show exports increased for an 11th straight month. The currency appreciated 0.5 percent to NT$31.093 against its U.S. counterpart.
The central bank may have intervened yesterday, selling at least NT$20 billion ($643 million) to curb the rise in the currency, the Economic Daily News reported. Brazil yesterday doubled a tax it charges foreigners on investment in fixed- income securities in a bid to stem gains in the real, which reached its strongest in more than two years last week.
South Korea’s won depreciated 0.7 percent to 1,130.58 per dollar, the biggest loss since Aug. 24, after the government announced that regulators will conduct an audit of banks’ foreign-exchange businesses. The nation is prepared to battle speculators as needed by intervening in the currency market, the finance ministry said in a report yesterday.
Thailand’s baht slid 0.1 percent to 30.20 per dollar, retreating from a 13-year high. Prime Minister Abhisit Vejjajiva said yesterday policy makers are working to curb any “excess volatility” in the baht.
To contact the reporter for this story: Darren Boey at dboey@bloomberg.net.
To contact the editor responsible for this story: Patrick Chu at pachu@bloomberg.net
http://jodnet.blogspot.com
The Nikkei 225 climbed 1.5 percent, erasing a 0.5 percent decline, to 9,518.76 as of 4 p.m. in Tokyo. The yen dropped to 83.68 per dollar from 83.36 in New York. Japanese 10-year bond yields fell to a six-week low. The MSCI Asia Pacific Index sank 0.2 percent. Standard & Poor’s 500 Index futures lost less than 0.1 percent. The Stoxx Europe 600 decreased 0.2 percent to 257.36 as Moody’s Investors Service placed Ireland’s debt ratings on review for possible downgrade.
The Bank of Japan’s decision to create a fund to buy bonds and other assets comes as policy makers in the U.S. and the U.K. consider similar steps to support their flagging economies. At the same time, governments in emerging markets from Brazil to South Korea are increasing currency controls as investment inflows threaten export growth.
“We’re looking to high-growth economies in both fixed and equity space,” Pacific Investment Management Co.’s Bill Gross, manager of the world’s biggest bond fund, said on Bloomberg Television’s “Surveillance Midday” with Tom Keene. Pimco’s “new normal” thesis “suggests low growth in the developed economies and higher growth in the developing economies.”
Five stocks advanced for every four that fell on the MSCI Asia Pacific Index, which gained 0.7 percent in the past two days. Australia’s S&P/ASX 200 Index dropped 0.4 percent after the central bank signaled it will raise interest rates as it left its overnight cash-rate target unchanged.
BOJ Pledges
Japan’s Topix Index climbed 1.2 percent, rallying from a 0.7 percent drop as the central bank’s pledges today raised optimism that the yen will weaken, bolstering the value of overseas sales at the country’s biggest exporters.
The Bank of Japan said its fund will buy government bonds and other assets. The central bank also lowered the benchmark interest rate to a range of zero percent to 0.1 percent from the previous 0.1 percent target. Fourteen of 17 economists surveyed by Bloomberg News had instead predicted the BOJ would expand a bank-loan program.
“This shows a commitment by the Japanese authorities to do whatever they can at their disposal to not allow the yen to appreciate anymore and provide liquidity,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages $85 billion. “Any measure to increase liquidity or loosen monetary situation is a step in the right direction.”
Sony, Toyota
Sony Corp., the maker of Bravia televisions, jumped 1.4 percent. Fanuc Ltd., Japan’s largest industrial robot maker, gained 2 percent. Toyota Motor Corp., the world’s biggest carmaker, gained 0.4 percent after falling as much as 1.5 percent earlier.
The yen was set for its biggest daily decline against the dollar since Sept. 15. Japan’s currency fell to 114.71 per euro from 114.08.
“The BOJ action came as a surprise because I had expected they wouldn’t cut rates before the Federal Reserve,” said Junichi Makino, a senior economist at Daiwa Institute of Research Ltd. in Tokyo. “The BOJ moved to back up intervention efforts by the government.”
The yield on the benchmark 10-year bond fell three basis points to 0.905 percent at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The price rose 0.276 yen to 100.867 yen. The yield dropped to as low as 0.895 percent, the least since Aug. 25.
Raw Materials
Raw-material companies fell the most among the MSCI Asia Pacific Index’s 10 industry groups as metal prices declined. BHP Billiton Ltd., the world’s biggest mining company, lost 1.3 percent in Sydney. Rio Tinto Group, the world’s third-largest mining company, sank 1.4 percent.
Copper slid 0.4 percent to $8,035 a metric ton in London, while aluminum sank 1.1 percent. Copper futures sank 0.7 percent yesterday in New York, the biggest loss since Sept. 10. Oil for November delivery declined 0.3 percent to $81.25 a barrel.
Alumina Ltd., which has a venture with Alcoa Inc., dropped 1.1 percent after Deutsche Bank AG put Alcoa on its short-term “sell” list. Alcoa, the largest U.S. aluminum company, unofficially starts the U.S. earnings season on Oct. 7.
Hankook Tire Co. slumped 4.4 percent in Seoul after Nomura Holdings Inc. lowered its rating on South Korea’s biggest tire maker to “neutral” from “buy,” citing recent gains in the shares and higher natural rubber prices.
Government Intervention
Taiwan’s dollar advanced for a fifth day before a government report this week that may show exports increased for an 11th straight month. The currency appreciated 0.5 percent to NT$31.093 against its U.S. counterpart.
The central bank may have intervened yesterday, selling at least NT$20 billion ($643 million) to curb the rise in the currency, the Economic Daily News reported. Brazil yesterday doubled a tax it charges foreigners on investment in fixed- income securities in a bid to stem gains in the real, which reached its strongest in more than two years last week.
South Korea’s won depreciated 0.7 percent to 1,130.58 per dollar, the biggest loss since Aug. 24, after the government announced that regulators will conduct an audit of banks’ foreign-exchange businesses. The nation is prepared to battle speculators as needed by intervening in the currency market, the finance ministry said in a report yesterday.
Thailand’s baht slid 0.1 percent to 30.20 per dollar, retreating from a 13-year high. Prime Minister Abhisit Vejjajiva said yesterday policy makers are working to curb any “excess volatility” in the baht.
To contact the reporter for this story: Darren Boey at dboey@bloomberg.net.
To contact the editor responsible for this story: Patrick Chu at pachu@bloomberg.net
http://jodnet.blogspot.com
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