Tokyo stock jumps after BOJ leaves policy unchanged

BANGKOK (AP) – Asian stocks rose on Wednesday, with Tokyo gaining more than 2% after Japan’s central bank left its loose monetary policy unchanged, dispelling speculation that it will succumb to pressure to tighten credit to counter rising inflation.

Oil prices rose and US futures rose.

The Bank of Japan shocked the markets in December with an unexpected widening of its target yield range on long-term government bonds. He maintained that range in his latest policy statement despite recent instances of 10-year government bond yields exceeding the 0.5% upside limit.

Inflation in Japan has been lower than in the US and many other countries, but prices have been creeping up as prices for oil, gas and other imports have risen, a global trend. Actions by other central banks to raise interest rates to dampen inflation, which has been high for decades, have driven the value of the Japanese yen down, once again weighing on Tokyo’s monetary stance. After the decision made on Wednesday, the key interest rate of the Bank of Japan remains at the level of minus 0.1%.

Core inflation in Japan, excluding volatile food and energy prices, is projected to rise to 1.8% in the fiscal year ending March, while wages rose marginally.

Expectations for a change in longstanding deflationary policies are rising as market watchers look to the resignation of Bank of Japan Governor Haruhiko Kuroda, who is due to step down in April.

Following the announcement by the Bank of Japan, the dollar rose sharply against the Japanese yen, climbing to 130.82 yen from 128.17 yen.

The Nikkei 225 in Tokyo added 2.5% to 26,801.88. The Australian S&P/ASX 200 rose 0.1% to 7,393.40, while the Hang Seng in Hong Kong lost early gains, falling 0.2% to 21,609.59. The Shanghai Composite index rose 0.1% to 3227.85 points.

Bangkok SET added 0.2% and Mumbai’s Sensex added 0.6%.

On Wall Street, stocks closed mixed on Tuesday as investors focused on a busy week of corporate earnings to see how much inflation is hurting the economy.

The story goes on

The S&P 500 fell 0.2% to 3990.97, ending a four-day winning streak. The Dow Jones Industrial Average fell 1.1% to 33,910.85, mostly due to a 6.4% drop in Goldman Sachs shares after the investment bank’s results were well below analysts’ estimates due to a deal halt .

A rise in tech stocks helped the Nasdaq Composite climb 0.1% to 11,095.11, extending the tech index’s winning streak to a seventh day.

Small stocks have lost some of their recent gains. The Russell 2000 fell 0.1% to close at 1884.29.

The markets were closed on Monday for a holiday. The year started well for Wall Street after a dismal 2022, but investor sentiment could change quickly as companies report their results for the October to December quarter.

Analysts expect S&P 500 companies to report lower fourth-quarter earnings compared to last year. This will be the first such downturn since 2020, when the pandemic ravaged the economy.

Several banks reported encouraging financial results last week, but also said the US economy is likely to enter a mild recession. Companies reporting their latest results this week include Netflix, M&T Bank and Procter & Gamble.

Bond yields remained relatively stable. The 10-year Treasury yield rose to 3.54% from 3.5% at the end of Friday. US bond and stock markets were closed on Monday for Martin Luther King Jr. Day.

Inflation and how the Federal Reserve will continue its fight against high prices remains a major concern for investors as they look at earnings and corporate reports.

Wall Street will get another inflation update on Wednesday when the government releases its December wholesale inflation report, which tracks prices before they are passed on to consumers. The government is also to release retail sales data for December, which could give investors more insight into how inflation is affecting consumer spending.

Consumer inflation has been declining for six straight months, raising hopes that the Fed will soon consider easing its interest rate policy, although it has said it will continue raising rates this year and does not expect rate cuts until 2024.

Elsewhere, US benchmark oil rose $1.00 to $81.18 a barrel in electronic trading on the New York Mercantile Exchange. It added 32 cents to $80.18 a barrel on Tuesday.

Brent crude, the pricing standard for international trade, rose 97 cents to $86.89 a barrel.

The euro fell to $1.0780 from $1.0790.

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