Offshore yuan in Hong Kong strengthened to trade at 6.6620 to the United States dollar at 10.40am, 0.07 per cent, or 46 points weaker than on Thursday. Hong Kong’s Hang Seng index fell 0.5 percent at 22,059.85. Japan’s Nikkei rose, and European indices rose on the back of better-than-expected results from Barclays BARC.L and UBS UBSG.S . “Increasing ETF purchases makes no contribution to achieving 2 percent inflation”.
Advertisement
The Bank decided, by a 7-2 majority vote, to continue applying a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.
“The Bank of Japan has got a history of disappointing the market”, said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.
But with prices still falling after three-and-a-half years of the prime minister’s pro-growth policies, known as Abenomics, expectations are growing for more action by the government and the central bank.
“As the government is preparing a supplementary budget, the BOJ is perhaps feeling that they could maximize the impact of what little easing it can do by synchronising their moves”, said Daisuke Nomoto, senior portfolio manager at Columbia Threadneedle Investments in Boston.
At the two-day rate review that ended on Friday, the BOJ made a decision to increase ETF purchases so that its total holdings increase at an annual pace of 6 trillion yen, up from the current 3.3 trillion yen.
Unemployment had fallen to 3.1 percent in June from 3.2 percent for the past several months, but tightness in the job market has not spilled into significant increases in wages that might help spur more consumer demand and encourage businesses to invest in the sort of “virtuous cycle” Abe has been promising since he took office in late 2012 under Abenomics.
“The BOJ believes that (today’s) monetary policy measures and the government’s initiatives will produce synergy effects on the economy”, the central bank said in a statement announcing the policy decision. South Korea’s Kospi was up 0.1 percent at 2,023.71.
Financials led the way, with the euro zone banking index up more than 2 percent .SX7E and on track for a rise of almost 8 percent for July, its best month since February.
Japan’s Nikkei 225 closed 0.6 percent up at 16,569.27, regaining earlier losses.
Household incomes rose 0.3 percent in June, weak for a month when workers commonly receive bonuses.
Wall Street shares stood near all-time highs, with tech heavyweights Alphabet and Amazon rising after the bell following their earnings.
USA futures augured a lower opening on Wall Street, with the Dow futures down 0.2 percent and S&P futures also 0.2 percent lower.
USA crude futures fell to as low as $40.95 a barrel and were last down 0.2% at $41.08.
In Europe, the release of bank stress tests will also be a focus for investors on Friday, and in the United States investors will watch the first read of gross domestic product for the second quarter.
Advertisement
Worldwide benchmark Brent crude futures LCOc1 dropped 9 cents to $42.61, its lowest since mid-April. It is down 6.7% this week and 14% this month.
