Asian stocks gain before BOJ as Yen holds drop; oil snaps rally

[SINGAPORE] Asian stocks climbed toward a more than eight-month high as a weaker yen buoyed Japanese shares before the central bank reports on monetary policy. Crude oil fell from its highest price this year, and copper retreated.

The MSCI Asia Pacific Index rose a fifth day, adding 0.3 per cent by 10:01 a.m. in Tokyo as Japan's Topix index increased 0.6 per cent. The yen was near a more than two-week low, while the Korean won slipped 0.6 per cent. Standard & Poor's 500 Index futures were little changed after the gauge dropped 0.2 per cent in the last 30 minutes of US trading. Oil in New York fell for the first time in three days. Copper lost 0.2 per cent in London.

The Bank of Japan is expected to maintain its record stimulus on Wednesday, while minutes of the Federal Reserve's March meeting will be released, potentially giving investors more clarity on the timeline for US rate rises. Alcoa Inc unofficially kicks off the American earnings season, and the euro area reports on retail sales. Oil supplies data is due, with analysts predicting US stockpiles expanded from a record.

"The BOJ is nowhere near its inflation target, so there's probably room for further easing," Nader Naeimi, who helps manage about US$118 billion as Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd, said by phone. "That will be a good surprise for the market. The Fed's policy is data dependent and that's going to cause more volatility going forward."

The Topix advanced a second day and was set for its highest close since March 25 as commodity companies and air carriers drove gains. The yen was little changed at 120.23 per dollar after losing as much as 0.8 per cent to 120.45 per dollar on Tuesday, its weakest intraday level since March 20.

The BOJ, which issues a statement on monetary policy in Tokyo, will probably expand stimulus by the end of October, according to 22 of 34 economists surveyed by Bloomberg. The BOJ is among a wave of central banks globally easing policy to stave off deflation and ignite growth. In contrast, the Fed has ended its bond-buying program and is pondering its first rate increase since 2006.

The won dropped to 1,094.60 per dollar, while the Australian and New Zealand dollars gained at least 0.2 per cent versus the greenback. The Aussie was the only gainer among 16 major currencies versus the dollar on Tuesday after the central bank left key rates unchanged amid market expectations of a cut. The S&P/ASX 100 Index climbed 0.8 per cent in Sydney, while the Kospi index in Seoul was up 0.4 per cent on Wednesday.

BLOOMBERG