Asian stocks rise a fourth day after BoJ adjusts monetary policy

Pedestrians walk past an electronics stock display at the window of a security company in Tokyo on Sept 21, 2016.
Pedestrians walk past an electronics stock display at the window of a security company in Tokyo on Sept 21, 2016. PHOTO: AFP

HONG KONG (BLOOMBERG) - Asian stocks rose for a fourth day after tweaks to the Bank of Japan's monetary policy spurred a surge in the nation's shares and preserved investment flows to regional markets.

The MSCI Asia Pacific Index climbed 1.4 per cent to 140.65 as of 4:01 p.m. in Hong Kong, taking its rally since Sept. 15 to 3 per cent. Japan's Topix index jumped 2.7 per cent to the highest close since June 1 as the yen weakened 0.1 per cent to 101.78 a US dollar.

The BOJ kept its policy rate at minus 0.1 per cent and said the monetary base target, which previously had been set at annual increases of 80 trillion yen (S$1.070 billion), may now fluctuate in the short term as policy makers seek to control the yield curve.

"We're seeing a knee-jerk reaction to the BOJ decision but this could reverse depending on what we get tonight from the Fed," said Nicholas Teo, a trading strategist at KGI Fraser Securities in Singapore. "It seems the BOJ didn't go full force in its move to further ease monetary policy. Its a very safe move, choosing to reserve some of their bullets as they wait for the Fed's next moves."

Attention now turns to the US central bank's review later on Wednesday, with futures traders seeing a 22 per cent chance of an interest-rate increase. Global markets have oscillated amid an uptick in volatility the past two weeks, with concern mounting that monetary authorities are becoming less committed to stimulus amid persistently mixed economic data. 

A report Tuesday showed US new-home construction fell more than projected in August, representing a pause after a spell of strong gains.

"With US data pretty mixed at the moment, there's a lack of consensus among Fed policy makers whether to raise rates," said Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group Ltd. "The focus of investors will be on the tone of the Fed statement."

Australia's S&P/ASX 200 Index increased 0.7 per cent, as did Taiwan's benchmark gauge. Hong Kong's Hang Seng Index and the Jakarta Composite Index advanced 0.6 per cent, Thailand's SET Index added 1.3 per cent and South Korea's Kospi index rose 0.5 per cent. The Shanghai Composite Index closed up 0.1 percent, as did Singapore's Straits Times Index. New Zealand's S&P/NZX 50 Index declined 0.4 percent.