Yen surges, Tokyo stocks loses more ground after Bank of Japan keeps monetary policy steady

This file photo taken in 2014 shows a bank clerk counting Japanese currency notes in Tokyo.
This file photo taken in 2014 shows a bank clerk counting Japanese currency notes in Tokyo.PHOTO: AFP

TOKYO (Bloomberg) - The yen soared and Japan's stock-index futures extended losses after the nation's central bank refrained from easing monetary policy. Oil extended its slump and Asian stocks fell, while gold climbed.

Japan's currency strengthened past 105 per US dollar for the first time since September 2014 and futures on the Nikkei 225 Stock Average sank 2 percent in Singapore. Equities in Hong Kong slid and U.S. crude dropped in its longest run of losses since February. Gold climbed a seventh day and yields on Australia's 10-year sovereign bond fell to a record low, declining below 2 percent amid demand for havens. The greenbackextended Wednesday's slide after the number of Federal Reserve officials who see just a single rate hike this year rose to six, from one in March.

Japanese stocks are among the world's worst performers this year, while the BOJ's negative interest-rate policy adopted in January has failed to curb the yen's surge. The BOJ's decision followed the Fed's Wednesday policy meeting and comes amid turmoil in global markets as a British vote nears on leaving the European Union. Odds of the Fed raising key borrowing costs this year are now below 50 percent, with Chair Janet Yellen saying that the U.K.'s June 23 referendum was a factor in the central bank's decision to hold rates steady.

About 28 percent of economists in a Bloomberg survey had forecast additional easing at this meeting, with 55 percent looking to the next gathering on July 29, when the BOJ will update its inflation projections.

The MSCI Asia Pacific Index lost 0.5 percent as of 11:47 a.m. Tokyo time. Japan's Topix index fell 1.2 percent before the lunch break, with the BOJ's decision coming while the cash equity market was shut. The Hang Seng China Enterprises Index slid 2.4 percent, the biggest regional decliner.

S&P 500 Index futures slipped 0.2 percent after the U.S. benchmark erased gains of as much as 0.5 percent to end Wednesday down 0.2 percent. Traders said selling pressure built up through the afternoon in New York but didn't hit stocks until after Yellen finished her press conference. One signal was in crude, with New York-traded futures beginning to drop roughly when the Fed's statement arrived and continuing their decline through Yellen's testimony. Others pointed to an imbalance of orders that often materializes at the end of trading sessions.

"Without something to push equities higher, besides low rates, we're losing steam," said Bill Schultz, who oversees US$1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. "With uncertainty around the British vote later this month, the path of least resistance seems to be down." The Shanghai Composite Index slipped 0.5 percent. Mainland Chinese shares rallied on Wednesday amid speculation state- backed funds were supporting the market after MSCI Inc. declined to add local equities to its benchmarks.

Australia reported Thursday that the number of people with jobs increased in May, driven by gains in part-time employment. Indonesia will review benchmark rates, with economists surveyed by Bloomberg predicting policy will be left as is.

The pound maintained most of last session's 0.6 percent rebound, trading at US$1.4189 after gaining on a faster-than- expected increase in U.K. wage growth. The kiwi jumped 0.5 percent, rising for a second day after data showed New Zealand's economy expanded 2.8 percent last quarter from a year earlier, exceeding the 2.6 percent growth projected by analysts.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell 0.2 percent to extend Wednesday's 0.3 percent retreat. The Korean won and Malaysian ringgit climbed 0.2 percent.

"This slow-go Fed should be positive for foreign currencies and should take the wind out of the dollar's sails," said Robert Tipp, head of global bonds and foreign exchange for the fixed- income division of Prudential Financial Inc., in Newark New Jersey. "That may not happen in a big way until we get past the Brexit vote. It's an important event on the horizon and investors may not be willing to take big positions until we get past that." Fed officials continue to forecast two 25 basis-point rate hikes this year, after leaving the target range for the federal funds rate unchanged at 0.25 percent to 0.5 percent.