Sat, Jan 23, 2016 - Page 15 News List

Tokyo shares rise on news of easing

INSTRUMENTS:Mario Draghi said there are ‘no limits’ to how far the ECB was willing to ease monetary policy, while a report said that the BOJ was mulling more measures


Tokyo shares yesterday rallied nearly 6 percent, tracking strong gains in the US and European markets as hopes for fresh European and Japanese central bank stimulus cheered investors.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange soared 5.88 percent, or 941.27 points, to 16,958.53, while the broader TOPIX also gained 5.59 percent, or 72.70 points, to 1,374.19.

After suffering a series of heavy losses since the start of the year, global investors were cheered by a pledge from the head of the European Central Bank (ECB) that he was ready to further ease monetary policy.

That was followed by a report in the Nikkei business daily that the Bank of Japan (BOJ) was also considering plans for more economy-boosting measures as consumer prices are hammered by crashing oil prices.

“With further hopes for policy coordination among the central banks, the market will be supported,” Nomura Holdings Inc senior strategist Juichi Wako told Bloomberg News. “Things will still be volatile, but we’ll generally be rising.”

Overnight, the ECB kept interest rates unchanged, but ECB President Mario Draghi highlighted worries about weak inflation in pledging to reconsider monetary stimulus levels in March.

“We have the power, willingness and determination to act,” Draghi told a news conference.

“There are no limits [to] how far we are willing to deploy our policy instruments,” he added.

Sentiment also improved following a 4.2 percent rise in US oil prices to US$29.53 per barrel, a move partly seen as a technical bounce following Wednesday’s sharp decline to a 12-year low.

US stocks advanced, with the S&P 500 climbing 0.5 percent behind strong gains in petroleum shares.

Meanwhile, the BOJ’s policymaking board, which is to meet next week, is reportedly mulling whether to offer additional easing measures to address risks to the economy under a stronger yen, declining shares and falling oil prices.

The BOJ might consider expanding its ¥80 trillion (US$677.8 billion) annual asset-buying scheme, according to the Nikkei.

“The cavalry might be coming to the rescue in terms of the central banks starting to sound more dovish,” AMP Capital Sydney-based head of investment strategy Shane Oliver told Bloomberg TV.

“There’s a little bit of light at the end of the tunnel. We’ve probably seen the worst and by the end of the year, things will be a lot brighter than they are now,” he added.

Elsewhere in Asia, Hong Kong rose 2.9 percent and Shanghai ended 1.3 percent higher; Sydney added more than 1 percent and Seoul 2.1 percent, while there were also substantial gains in Taipei, Singapore and Manila.

The positivity also seeped into currency markets, as investors shifted out of assets considered safe havens.

The US dollar slipped against most emerging market units, with the South Korean won up by 1.1 percent, Indonesia’s rupiah gaining 0.4 percent and the oil-dependent Malaysian ringgit up by 1.4 percent.

And the dollar advanced against the yen, which is the go-to currency in times of turmoil and uncertainty.

The greenback edged up to ¥118.05 — having tumbled more than 2 percent against the Japanese unit this year.

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