Asia: Stocks down, Japan gives up brief gains after BOJ stimulus

[SINGAPORE/TOKYO] Asian shares took their cue from Wall Street and slipped on Friday, and Japanese stocks slumped after briefly jumping on the central bank's statement that it would expand parts of its stimulus programme.

European shares were also poised to start lower, with financial spreadbetters expecting Britain's FTSE 100 to fall 0.3 percent, Germany's DAX to open down 0.8 per cent and France's CAC40 to begin the day off 0.5 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent. It was still up 1.6 per cent for a week that has featured first US interest rate hike in nearly a decade and a depreciating yuan.

Japan's Nikkei rose briefly but fell back to end the day 1.9 per cent lower. It ended the week down 1.3 per cent.

The Bank of Japan maintained its base money target under its massive stimulus programme on Friday but set up a new programme to buy exchange-traded funds, extend the maturity of bonds it owns to around 12 years, and increase its purchases of risky assets.

The divergence between US and other countries' monetary policies was also seen in Taiwan, with the central bank unexpectedly cutting interest rates for the second time this year on Thursday. The island's bank also said it would keep monetary policy loose to shore up growth in the trade-dependent economy as the global demand outlook worsened.

Taiwan stocks closed 0.8 per cent lower, shrinking gains for the week to 1.7 per cent. The Taiwan dollar strengthened to T$32.910 versus its previous close of T$33.035 after the central bank said it would maintain an orderly foreign exchange market.

"The global macro dynamics from the beginning of a Fed rate hiking cycle are slowly playing out across the world," Angus Nicholson, market analyst at IG in Melbourne, said in a note to clients.

"In the direct wake of the decision we have seen some dramatic moves in central bank policy with Taiwan cutting its benchmark interest rate, Hong Kong and Mexico both hiking rates, and Argentina removing currency controls and devaluing the peso by 30 percent."

The US dollar slipped about 0.5 per cent against the Japanese currency to 121.895 yen, and was up about 0.9 per cent for the week.

The dollar index, which tracks the greenback against a basket of six rivals, edged down about 0.4 per cent to 99.892, after jumping 1.2 per cent on Thursday, its biggest rise in over a month. It's up about 1.4 per cent for the week.

Non-deliverable forwards are pricing in further declines for most emerging market currencies, which dropped after the Fed's decision to hike rates.

One-year non-deliverable forwards show currencies including the Indonesian rupiah, Indian rupee, the Malaysian ringgit and the Thai baht weakening.

China's yuan strengthened on Friday after 10 straight sessions of weakness against the dollar through Thursday, the longest such streak on record, after the central bank guided the Chinese currency lower.

The People's Bank of China set Friday's midpoint rate at 6.4814 per dollar prior to market open, compared with the previous fix of 6.4757. The spot market opened at 6.4870 per dollar, and traded at 6.4789 at 0616 GMT, up from the previous close of 6.4837.

The euro was up about 0.3 per cent at US$1.0852, but down about 1.2 per cent for the week.

Wall Street drooped on Thursday as crude oil futures continued to wallow at multi-year lows against a backdrop of oversupply as well as a stronger dollar following the U.S. Federal Reserve's widely anticipated tightening on Wednesday.

US crude futures continued to slip in Asian trading, down 0.2 per cent at US$34.893 a barrel.

Brent ended trade on Thursday less than US$1 above its 2004 low of US$36.40. It recovered on Friday, rising 0.2 per cent to US$37.23.

Gold edged up slightly from Thursday, when it suffered its biggest slide in five months after the Fed's rate hike.

Spot gold rose 0.5 per cent, after tumbling 2 per cent on Thursday, and is down 1.6 per cent for the week.

REUTERS