Asian stocks mixed, yen falls as Fed, BOJ decide

[SYDNEY] The yen declined and the US dollar extended gains against major peers as the US Federal Reserve and the Bank of Japan announced diverging monetary policies. Stocks in Tokyo pared gains while they were mixed elsewhere in Asia.

The Japanese currency fell to a two-month low as Bloomberg's dollar index rose for a second day. The US central bank set an October start for shrinking its balance sheet and maintained a forecast for another rate increase this year, while the BOJ kept its monetary stimulus unchanged.

Japan's Topix index wiped out almost all the session's advance. The 10-year Treasury yield approached 2.30 per cent. Oil held above US$50 a barrel, gold retreated and base metals tumbled.

While US policy makers left the benchmark interest rate unchanged, markets reacted to officials' hawkish forecast for where rates will be at the end of the year as they begin a reversal of quantitative easing.

BOJ Governor Haruhiko Kuroda and his board left the target interest rates and asset purchase program unchanged on Thursday, a decision expected by all 45 economists surveyed by Bloomberg, though one dissenting member unexpectedly emerged.

A rout in iron ore continued amid mounting concerns that global supplies are set to expand while demand from China will decline. Most-active SGX AsiaClear futures in Singapore sank as much 4.3 per cent to US$64.13 a metric ton, the lowest since July, with the contract headed for a third weekly loss.

WHAT TO WATCH OUT FOR THIS WEEK:

New Zealand's economy expanded at a faster pace in the second quarter, with GDP rising 0.8 per cent, matching economists' median forecast. It's the last major economic release before the Sept 23 election.  Philippine and Taiwan rate decisions are due Thursday.

Brexit strategy is in focus as Theresa May prepares to outline her revised approach on Friday.

Campaigning continues in Germany, days before the Sept 24 election.

The OECD publishes the Interim Economic Outlook in Paris.

STOCKS

Japan's Topix index climbed 0.1 per cent as of 2.26pm Tokyo time after rising as much as 0.7 per cent. The Kospi index was little changed and Australia's main benchmark fell 0.8 per cent.

Hong Kong's Hang Seng Index swung between gains and losses with the Shanghai Composite Index.

Futures on the S&P 500 Index were flat. The main gauge rose 0.1 per cent. The index closed at an all-time high, but hasn't moved more than 0.3 per cent for five sessions.

CURRENCIES

The Bloomberg Dollar Spot Index rose 0.2 per cent, adding to a 0.5 per cent surge on Wednesday.

The yen slid 0.3 per cent to 112.49 per US dollar. It dropped 0.6 per cent on Wednesday.

The Australian dollar fell 0.7 per cent to 79.76 US cents.

The New Zealand dollar lost 0.6 per cent to 73.14 US cents. The kiwi has been sensitive to opinion polls ahead of an election this weekend, jumping on Wednesday when the latest survey showed the ruling National Party surging back into the lead over the main opposition Labour Party.

The euro was at US$1.1880, down 0.1 per cent. It declined 0.9 per cent in the previous session.

The onshore yuan dropped after the PBOC weakened its daily reference to the lowest since Sept 1.

BONDS

The yield on 10-year Treasuries was steady at 2.27 per cent, the highest since July.

Australian 10-year bond yields climbed about one basis point to 2.84 per cent.

COMMODITIES

Gold lost 0.3 per cent to US$1,297.70 an ounce.

West Texas Intermediate crude climbed 0.5 per cent to US$50.66 a barrel following a 1.9 per cent advance. A drop in US fuel supplies boosted the outlook for crude demand.

Copper extended loses, falling as much as 1.3 per cent on the London Metals Exchange before trading down 1.1 per cent at US$6,454.50 a metric ton.  Iron ore futures on the Dalian Commodity Exchange were on the cusp of closing in bear market territory.

BLOOMBERG