Locally, the Bangko Sentral ng Pilipinas is also set to hold its policy-setting meeting today.
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The bank kept interest rates on hold at -0.1%, but said further rate cuts could be made in the future. Atsushi Takeda, an economist at Itochu in Tokyo, said the decisions suggested the BoJ was “reaching its limit to monetary options”. There was P349 million in net foreign selling for the day.
The decision caused a lift in Australian bond yields too; the 10-year Australian commonwealth government bond yield rose as high as 2.165 per cent before settling at 2.128 per cent.
The Nikkei sprang from negative territory to end 1.9 percent higher after the Bank of Japan said it would aim to raise government bond yields as part of its drive to kickstart inflation.
“With underlying inflation set to fall to zero in coming months, we expect the policy rate to eventually fall to minus 0.4 percent”, Marcel Thieliant of Capital Economics said in a commentary.
“The Bank believes that its monetary policy and the government’s fiscal policy as well as initiatives for strengthening Japan’s growth potential will produce synergy effects, and thereby will navigate Japan’s economy toward overcoming deflation and achieving sustainable growth”, it said.
The 17 Fed policymakers will have to balance a strong labor market, marked by an unemployment rate of 4.9 per cent and job gains that are outpacing population growth, with inflation that is still well below the central bank’s 2 per cent target and weak August readings for manufacturing and service industry activity. Global stock markets traded with a positive bias Tuesday, Sept. 20, 2016, a day ahead of policy statements from the U.S. Federal Reserve and Bank of Japan that could go a long way to driving sentiment over the rest of the year.
The Dow Jones industrial average rose 76.53 points, or 0.42 percent, to 18,206.49, the S&P 500 gained 11.36 points, or 0.53 percent, to 2,151.12 and the Nasdaq Composite added 23.79 points, or 0.45 percent, to 5,265.14.
Attention now turns to the USA central bank’s review later on Wednesday, with futures traders seeing a 22 per cent chance of an interest-rate increase.
Australia’s S&P/ASX 200 Index increased 0.7 per cent, as did Taiwan’s benchmark gauge.
The yen weakened against the USA dollar and traded at 102.54 at 1.39pm.
West Texas Intermediate for November delivery, a new contract, was 91 cents higher at $44.96 and Brent was up 72 cents at $46.60.News that Libya had finally shipped its first cargo of crude since 2014 from its Ras Lanouf port had little immediate effect on prices.
Stocks in Japan jumped on the BoJ news, with the Nikkei 225 index closing almost 2% higher.
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But copper was moving in the opposite direction – metal for December settlement on the Comex division of the New York Mercantile Exchange was last down 0.85 cents or 0.4 percent to $2.1565 per pound. Chevron rose about 1 per cent. The Hang Seng of Hong Kong gained 0.6 percent and South Korea’s Kospi rose 0.5 percent.
