Asia report: Markets mostly lower after BoJ disappointment

Markets in Asia ended Friday relatively lower, with shares in Japan tumbling immediately after the Bank of Japan eased off appeasing markets in a keenly anticipated decision.

The Nikkei 225 tumbled as much at 1.7% after the central bank announced, and spent much of the session bobbing above and below the waterline before closing up 0.56% at 16,569.27.

Monetary policy was eased by the central bank, as it increased its purchases of exchange-traded funds, though it didn’t changed interest rates or increase the monetary base, both of which were expected by analysts.

The BoJ said it would up its ETF purchases, resulting in the amount outstanding on the balance sheet rising at an annual pace of JPY 6 trn, instead of the current JPY 3.3trn.

“The message the BoJ is sending is not so much much 'whatever it takes' as 'monetary policy's pretty much played out',” said Societe Generale global fixed income strategist Kit Juckes.

Yen rocketed ahead against the greenback after the decision, and was last 1.61% stronger at JPY 103.58 per $1.

Japanese government bonds sold off during the session, with the yield on the benchmark 10-year bond moving to -0.169% from -0.276 earlier.

The BoJ’s relatively tame moves were made even more surprising by the persistent rumours that Prime Minister Shinzo Abe is preparing a fiscal stimulus package worth around JPY 20trn.

Data from the Bureau of Statistics out before markets opened showed a 0.4% fall in the consumer price index year-on-year in its latest reading, while the core CPI - which excludes fresh food prices - was down 0.5%.

Japan’s core-core CPI, which excludes energy as well as fresh food, actually increased 0.4% year-on-year.

Household spending from Japan fell 2.2% year-on-year in June, a fair whack more than the 0.3% gain predicted by economists.

The country’s seasonally-adjusted unemployment rate fell 0.1% month-on-month in June, to 3.1%.

Industrial production rose 1.9%, according to the Ministry of Economy, Trade and Industry.

On the corporate front, Nomura added 12.54% during the session after reports emerged that the bank was planning to spend JPY 45bn to buy back up to 2.6% of its shares.

Nomura also reported that its net profit in the quarter through June fell to JPY 46.83bn, from JPY 68.7bn at the same time last year.

Electronics giant Sony posted its earnings after markets closed, with operating profit in the quarter through June falling 42% to JPY 56.2bn year-on-year.

The company said the fall was a result of deterioration in the semiconductors markets, which was at least partially offset by its mobile, games and network services business.

Sony also added net charges of JPY 13.6bn in the semiconductors business as a result of damage and loss of production after the Kumamoto Earthquakes.

On the mainland, the Shanghai Composite closed down 0.5% to 2,979.37, and the Shenzhen Composite slipped 0.48% to 1,941.55.

South Korea’s Kospi lost 0.24% to close at 2,106.19, while Hong Kong’s Hang Seng Index slipped 1.28% to 21,891.37.

Industrial output in South Korea slipped 0.2% on a seasonally-adjusted month-on-month basis in June, surprising analysts who were looking for a 0.2% rise.

On an annual basis, industrial output slowed to 0.8% growth in June, compared with the revised 4.7% growth seen in May.

Crude prices were down, with Brent crude falling 1.28% to $42.16 per barrel and West Texas Intermediate down 0.93% at $40.76.

In Australia, the S&P/ASX 200 managed a 0.1% gain to 5,562.35, while New Zealand’s S&P/NZX 50 rose to a new fresh record, adding 0.7% to 7,355.61.

The down under dollars were both stronger against the greenback, with the Aussie last 0.04% ahead at AUD 1.3320 per $1 and the Kiwi strengthening 0.42% to NZD 1.4078.