Japan Stocks shines on BOJ monetary policy easing

Japan share market finished session higher on Monday, 27 April 2020, as the market mood was buoyed by the Bank of Japan expansion of monetary stimulus and pledged to buy unlimited amount of bonds to keep borrowing costs low and to ramp up its purchases of corporate debt to combat the hit on Japan's economy as a result of the coronavirus pandemic. At closing bell, the 225-issue Nikkei Stock Average advanced 538.27 points, or 2.79%, to 19,800.27. The broader Topix index of all First Section issues on the Tokyo Stock Exchange added 26.01 points, or 1.83%, at 1,447.30.

Total 32 issues of 33 industry category of Topix index were in positive territory, with Marine Transportation, Iron & Steel, Nonferrous Metals, Air Transportation, Electric Appliances, Real Estate, and Glass & Ceramics Products issues being notable gainers.

 

The Japanese central bank announced a series of measures on Monday to combat the hit on Japan's economy as a result of the coronavirus pandemic. These included the increase in purchases of commercial paper and corporate bonds and further active buying of Japanese government bonds and treasury discount bills. The central bank announced it will raise its annual target for buying corporate bonds and commercial paper to 20 trillion yen ($187 billion) to help companies secure funds more easily as part of wider efforts to weather the pandemic. The BOJ scrapped its guidance for putting an annual ceiling of 80 trillion yen ($743 billion) on the amount by which it can increase its JGB holdings to provide ample liquidity to financial markets.

The BOJ also kept the short-term policy interest rate target at -0.1% as well as a pledge to keep 10-year Japanese government bond yields around 0%. The BOJ also downgraded Japan's economic forecast for fiscal 2020 ending in March to a contraction of between 3 percent and 5 percent.

The fresh monetary support comes after the central bank decided in March to introduce further easing measures for the first time in over 3 years. The move puts the BOJ in line with other major central banks that have unleashed unprecedented amounts of monetary support as the health crisis stokes fears of a deep global recession.

Shares of robot maker Fanuc climbed more than 10% following the release of the firm's financial results for the year ended March 2020.

CURRENCY: The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 100.09 after seeing levels below 100 last week. The Japanese yen traded at 107.35 per dollar after seeing volatility last week as it swung between levels above 107.8 and below 107.4.

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