Asian stocks mixed; dollar gains on Japan easing hopes

Tuesday, 5 October 2010 22:05 -     - {{hitsCtrl.values.hits}}

HONG KONG, (AFP) - Japanese shares soared and the yen tumbled Tuesday after the central bank announced a surprise zero percent interest rate policy but regional markets were mixed following a weak lead from Wall Street.

The Bank of Japan cut interest rates from 0.1 percent to between zero and 0.1 percent, the first rate move since December 2008, as it tries to give a much-needed boost to the ailing economy.

The decision, which came with other monetary easing measures, immediately sent the Nikkei higher, ending up 1.47 percent, or 137.70 points, at 9,518.76.

Hong Kong shares also rebounded from earlier lows to end up 0.09 percent, or 20.48 points, at 22,639.14.

Japan’s Nikkei was helped by the yen tumbling to 83.99 against the dollar, from 83.38 in New York, which gave exporters a boost. But it later regained its strength to reach 83.30 against the greenback amid expectations of easing measures from the US Federal Reserve next month.

The euro rose to 114.90 yen from 113.86 in New York.

A weaker yen lifts exporters as it makes their goods more competitive abroad.

“It’s a measure that exceeds market expectations,” Yoshinori Nagano, senior strategist at Daiwa Asset Management, told Dow Jones Newswires.

Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp, said: “The central bank decided on easing measures on a scale and rate much bigger than the market had expected.”The BoJ in September expanded a multi-billion-dollar loan scheme to ease monetary conditions and help offset the impact of a strong yen, but the move was criticised as not offering enough.

Tuesday’s announcement showed that the central bank had yielded to government calls to do more to help the economy, which has been stuck in a painful spiral of deflation and low growth, market-watchers said.

“It was a quite positive surprise,” said Masumi Yamamoto, equity market analyst at Daiwa Securities Capital Market.

“This signalled the Bank of Japan bowed to pressure from the government and took all the possible measures, which may actually create a new concern that the BoJ has no card to play in its hands,” Yamamoto said.

The greenback clawed back slightly against the euro as concerns resurfaced over the state of European economies.

The euro was at 1.3711 to the dollar, up from 1.3683 in New York Monday. The European currency last week reached 1.3791 dollars, its highest reading since March 17.

However, downbeat news out of the eurozone weighed on the single currency.

The Irish central bank cut its 2010 GDP growth forecast from 0.8 percent to 0.2 percent, while the draft Greek budget forecast that country’s economy would contract a further 2.6 percent in 2011, after an expected 4.0 percent slump this year.

Sydney fell 0.40 percent, or 18.4 points, to 4,606.9 thanks to a late rally after the Australian central bank said it would keep interest rates on hold at 4.50 percent for the fifth straight month. Chinese markets were closed for a public holiday.

Most Asian traders took their cue from the Dow, which ended Monday 0.72 percent lower as jitters set in before Friday’s of key jobs data, which provide a clue as to the state of the world’s biggest economy.

On oil markets, New York’s main contract, light sweet crude for delivery in November, eased 12 cents to 81.35 dollars a barrel. Brent North Sea crude for November fell 14 cents to 83.14 dollars.

Gold closed at a record high 1,327.50-1,328.50 US dollars an ounce in Hong Kong, from Monday’s close of 1,317.50-1,318.50 dollars.

In other markets:

  •  Seoul edged down 0.35 points, or 0.02 percent, to 1,878.94.
  • Taipei fell 0.55 percent, or 45.67 points, to 8,200.43.

Nan Ya Plastics fell 1.63 percent to 66.4 Taiwan dollars while TSMC was 1.29 percent lower at 61.1.

  •  Singapore closed up 0.16 percent, or 4.91 points, at 3,162.36.

United Overseas Bank fell 0.64 percent to 18.68 Singapore dollars while Singapore Airlines gained 0.74 percent to 16.44.

  •  Jakarta rose 0.62 percent, or 22.20 points, to 3,591.69.

Bank Rakyat rose 2.4 percent to 10,600 rupiah, heavyweight Telkom added 2.6 percent to 9,800 and car maker Astra fell 1.8 percent 58,950 rupiah.

  •  Kuala Lumpur closed up 0.68 percent, or 9.92 points, at 1,472.19.

Telecoms firm added 18 percent to 24.80 ringgit, property group SP Setia rose 2.0 percent to 4.60 while builder MMC Corp declined 1.60 percent to 3.15.

  •  Manila slipped 0.39 percent, or 16.44 points, to end at 3,218.32.

Energy Development was down 0.5 percent at 6.17 pesos and SM Investments fell 0.4 percent to 545. Philippine Long Distance Telephone Co. bucked the trend to rise by 1.28 percent to 2,684 pesos.

  •  Wellington fell 0.33 percent, or 10.60 points, to 3,218.32.

Fletcher Building shed 1.3 percent to 8.07 New Zealand dollars, Air New Zealand was steady at 1.29 and Telecom finished down 1.0 percent at 2.03.

  •  Bangkok climbed 0.52 percent, or 5.06 points, to 969.28 baht.