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Asian Markets at Close Report

European Markets at Close Report

Jun 16, 2016

Asian Markets at Close Report, by MarketWatch on June 16, 2016: Nikkei Sinks 3%, Yen Climbs After Bank of Japan Stays Pat:

marketwatch.com

Dominique Fong 
 
Japanese stocks tumbled Thursday, leading losses across Asian stock markets, after the Bank of Japan kept its monetary-easing policies unchanged.

Japan’s Nikkei Stock Average NIK, -3.05%  ended down 3.1%. Thursday’s losses were enough to edge the Nikkei past China’s main stock index as the worst-performing benchmark in Asia so far this year.
As of Thursday’s close, the Nikkei is down 18.9% in the year to date, compared with the Shanghai Composite Index’s 18.8% decline.
Elsewhere in the region on Thursday, Korea’s Kospi SEU, -0.86%  fell 0.9% and Hong Kong’s Hang Seng Index HSI, -2.10%  dropped 2.1%. The Shanghai Composite Index SHCOMP, -0.50%  was down 0.5% while Australia’s S&P/ASX 200 XJO, -0.02%  was little changed, ending down 0.02%.
Traders in Asia were focusing on the Bank of Japan’s decision to make no changes to its asset-purchasing program and deposit interest rate. Analysts said the central bank may have held off from additional easing to avoid rattling markets ahead of a June 23 referendum in which U.K. voters will decide whether to leave the European Union, a so-called Brexit.
“There’s too many risks coming up, with the BOJ [policy meeting], and Brexit coming up next week,” said Tareck Horchani, a senior sales trader at Saxo Capital Markets. “The market is a bit nervous to be long equities ahead of these events. The rest of Asia is moving lower on the back of Nikkei.”
In the afternoon, after the BOJ decision, stocks in Japan fell sharply as the yen tested its strongest levels against the U.S. dollar in nearly two years. Shares of insurers and auto makers sank. Dai-ichi Life Insurance Co. Ltd. 8750, -3.54%   fell 3.5%, and Nissan Motor Co. 7201, -4.33%  was down 4.3%.
The yen’s strength Thursday prompted a senior official from Japan’s Ministry of Finance to say he was worried about one-sided, rapid yen movements, the business newspaper Nikkei reported, without disclosing the name of the official.
But buying pressure on the yen intensified even after Japan’s stock market closed for the day. The yen USDJPY, -1.74%  briefly hit ¥103.95 per U.S. dollar after the market closed, its strongest level since Aug. 29, 2014.
Bank of Japan Gov. Haruhiko Kuroda said Thursday afternoon that more time was needed for the effect of negative rates to show up in the real economy, and that officials wouldn’t hesitate to take additional easing measures if needed.
General anxiety about the strength of the U.S. economic recovery and the chance of a British exit, or “Brexit,” have driven investors into the yen, seen as a safe-haven asset. Federal Reserve officials overnight lowered projections of how much they will raise interest rates this year.
“If in fact the U.K. leaves the bloc, there would certainly be negative implications such as the yen’s strength,” said Hitoshi Ishiyama, chief strategist at Sumitomo Mitsui Asset Management. “They [BOJ officials] wanted to keep the easing option, facing the risk that is prevailing globally.”
Meanwhile, Chinese markets were relatively quiet in the wake of data, released Wednesday after the market close, showing credit growth slowed in May. The retreat suggests companies are borrowing less money in an effort to meet Beijing’s stated goal of cutting industrial overcapacity.
In other markets, the yield on the newest 20-year Japanese government bond TMBMKJP-10Y, -3.30%  fell to a record low of 0.095%, the latest sign that investors are chasing yield.
Gold GCQ6, +2.02%  , a safe-haven asset, rose in early Asian trade and was recently up 1.8% to $1,312.
The price of Brent crude oil LCOQ6, -1.76%  was down 1% at $48.51 a barrel.