Asian stocks pared declines, with Japanese shares reversing losses, after the Bank of Japan (8301) expanded its stimulus program in its first policy decision under new governor Haruhiko Kuroda.
Toyota Motor Corp., the world’s largest carmaker, advanced 2.8 percent, reversing an earlier drop, as the yen weakened against the dollar and Japanese government bonds rose. Mitsubishi Estate Co. (TPREAL) surged 7.2 percent in Tokyo, leading gains among property firms. BHP Billiton Ltd., the world’s No. 1 miner, retreated 1.5 percent in Sydney as copper sank to the lowest price since August.
The MSCI Asia Pacific Index (MXAP) slid 0.6 percent to 134.11 as of 6:05 p.m. in Tokyo, paring a loss of as much as 1.1 percent. Japan’s Topix Index reversed declines of as much as 2 percent to close 2.7 percent higher after the central bank said it will double monthly bond purchases in a bid to reach 2 percent inflation in two years. Markets in China, Hong Kong and Taiwan are closed today for a holiday.
“It’s quite an aggressive move and it shows the Bank of Japan is more serious than they’ve ever been,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages $126 billion. “They are already quite close to doing open-ended quantitative easing, anyway, and they are likely to announce that later in the month. They have announced a lot more than I thought they would. There’s more to come.”
The MSCI Asia Pacific Index, the regional benchmark gauge, climbed the past five months as Japanese shares increased on speculation the nation will deploy more stimulus and amid signs the U.S. economy is recovering.
The Bank of Japan board today streamlined its asset purchase programs, temporarily suspended a cap on some bond holdings and dropped a limit on debt maturities. The BOJ will buy 7 trillion yen ($74 billion) of bonds a month, the central bank said in a statement.
Japanese exporters and real-estate developers advanced. Toyota Motor Corp. gained 2.8 percent to 4,925 yen and Honda Motor Co., Japan’s second biggest carmaker, rose 3.4 percent to 3,645 yen. Mitsubishi Estate gained 7.2 percent to 2,846 yen and Sumitomo Realty & Development Co. soared 10 percent to 4,165 yen.
“It’s a pretty strong statement of conviction from the Bank of Japan,” said Jeremy Hall, Singapore-based director of Japanese equities at Henderson Global Investors Ltd., which oversees about $99 billion. “I’m still quite constructive on the outlook for Japanese equities.”
New Zealand’s NZX 50 Index added 0.4 percent. Australia’s S&P/ASX 200 Index slid 0.9 percent. India’s S&P BSE Sensex Index declined 1.2 percent, falling for a second day, as overseas funds sold shares amid concern economic growth is weakening and corporate earnings may disappoint.
South Korea’s Kospi index retreated 1.2 percent, the most in four months, as the risk of conflict with North Korea curbed demand for the nation’s assets. North Korea ratified a law this week authorizing plans for “counter-actions,” including a nuclear strike, against so-called U.S. aggression, official media reported today.
“North Korea is heightening its threats day by day and that risk factor is having a negative impact on South Korean financial markets,” said Jeon Seung Ji, an analyst at Samsung Futures Inc. in Seoul. “Rising tension is prompting foreign investors to sell more Korean stocks, weakening the currency. In the meantime, exporters are likely to look for a point to sell dollars.”
Futures on the Standard & Poor’s 500 Index (SPX) rose 0.4 percent. Financial and energy shares tumbled yesterday, leading the S&P 500 to its largest drop in five weeks, as ADP Research Institute data showed U.S. companies boosted employment by 158,000 workers in March, less than the median forecast of 39 economists surveyed by Bloomberg who called for a 200,000 gain.
The data came before a non-farm payrolls report from the Labor Department on April 5, which may show U.S. employers hired a net 195,000 workers for the month, according to the median forecast of 87 economists surveyed by Bloomberg.
Fujifilm Holdings Corp. (4901), which has a bird-flu treatment under regulatory review, rose 5.7 percent to 1,879 yen in Tokyo after the disease took a third life in China. Health authorities in Shanghai are investigating a man’s death yesterday at a city hospital as a new strain of bird flu spreads in eastern China.
Copper for three-month delivery in London dropped for a fifth day, sliding to an eight-month low of $7,331.50 a metric ton. BHP Billiton (BHP) declined 1.5 percent to A$31.75 and Rio Tinto Group slid 1.4 percent to A$54.60.
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