Asian stocks fluctuate as investors await BOJ policy decision

An electronic board at the Korea Exchange shows the benchmark Korea Composite Stock Price Index in South Korea on July 26.
An electronic board at the Korea Exchange shows the benchmark Korea Composite Stock Price Index in South Korea on July 26. PHOTO: EPA

SINGAPORE (Bloomberg) - Asian stocks swung between gains and losses on Friday (July 29)as the yen strengthened in volatile trading before the Bank of Japan's policy decision.

The MSCI Asia Pacific Index rose 0.1 per cent to 134.97 as of 9:06 am in Tokyo, after dropping as much as 0.1 per cent. The gauge is heading for its third weekly advance, bringing the monthly gain to 4.7 per cent. The Topix index added 0.2 per cent even as the yen jumped 0.5 per cent.

South Korea's Kospi Index climbed 0.2 per cent. Australia's S&P/ASX 200 Index fell 0.1 per cent. New Zealand's S&P/NZX 50 Index was little changed. Markets in China and Hong Kong have yet to start trading.

Japanese shares have fluctuated this week ahead of the central bank's decision. The BOJ is widely expected to add to stimulus at the end of its two- day meeting.

"There's been a reasonable amount of uncertainty as evidenced by the contrasting views in the market in the runup to the meeting," Chris Green, the Auckland-based director of economics and strategy at First NZ Capital Group Ltd., said by phone. "There's increasing pressure to ease further from here. We're likely to see some sort of coordinated action between the BOJ and the government."

Thirty-two of 41 analysts in a Bloomberg survey forecast that the BOJ will expand its record stimulus program at the meeting. Prime Minister Shinzo Abe's government added pressure on Wednesday as Kyodo News cited him as saying a fiscal stimulus package of more than 28 trillion yen (S$360 billion) would be compiled next week.

Japan's consumer prices dropped 0.5 per cent in June from a year earlier, according to government data released on Friday. That's the fourth consecutive month of decline, showing how far prices are from the Bank of Japan's 2 per cent inflation target.

Futures on the China A50 Index slipped 0.2 per cent in their most recent trading, while those on the Hang Seng Index dropped 0.8 percent. Chinese stocks staged an afternoon recovery on Thursday, with the Shanghai Composite Index edging 0.1 per cent higher at the close, amid speculation a selloff that sent the benchmark equity gauge to its steepest loss in six weeks was excessive.

The advance comes after Chinese stocks slumped Wednesday on concern regulators will restrict investments in equities. The China Banking Regulatory Commission is said to be planning a crackdown on the US$3.5 trillion wealth management product market. The initial draft states that cash from "mass market" wealth products can only be invested in money or bond markets, and not in domestically listed shares, said a person with direct knowledge of the matter.

Futures on the S&P 500 Index added 0.1 per cent. The US equity benchmark index gained 0.2 per cent on Thursday, heading for a fifth monthly gain amid a raft of corporate results and ahead of data due Friday on the strength of the American economy.