A mini-return to 'bad news is good for stocks'

LAST week's column discussed the high chance that the Straits Times Index (STI) would enjoy a spot of month-ending window-dressing on Friday.

As it turned out, there was indeed a large push on the index on Friday, the final day of the month, not just because of our forecast of a play on the banks, thanks to their results, but also because of the news that the Bank of Japan (BOJ) is to resume its own version of "quantitative easing", or QE, even as the US Federal Reserve ended its own five-year-long QE.

The Fed's action was expected as it had signalled its intent to unwind its controversial US$3.5 trillion QE programme in May last year; however, the BOJ's was not, and although it signals a risk of stagnant growth or even deflation, markets have welcomed the move.