TOKYO: Tokyo stocks flew high with 4.8 percent gain to finish with highest close since November 2007 and the yen skidded to near seven-year lows against the dollar on Friday, after the Bank of Japan surprised markets with fresh easing steps it called a pre-emptive move to stoke inflation.
The Nikkei stock average marked its biggest one-day gain since June 2013 after Japan’s central bank said it would purchase more shares of exchange-traded funds and real estate investment trusts, extend the duration of its portfolio of Japanese government bonds, and increase the pace at which it expands base money to “pre-empt manifestation” of risks.
After the Nikkei closed, the BOJ released its latest semiannual outlook and slashed in half its economic forecast for the current fiscal year to 0.5 percent, after demand weakened in the wake of a sales tax hike in April.
BOJ Governor Haruhiko Kuroda told reporters on Friday that there was still room for further easing if needed, but the central bank believed Friday’s steps were sufficient.
Data released early on Friday showed Japan’s annual core consumer inflation slowed for a second straight month in September, adding to evidence the BOJ is likely to miss its price goal.
Before the BOJ’s surprise, markets were cheered by Wall Street’s surge late in Thursday’s session after news of surprisingly strong third-quarter U.S. economic growth as the trade gap narrowed. But domestic demand slipped, hinting at some loss of momentum.
The data came a day after the U.S. Federal Reserve surprised markets with an optimistic assessment of the U.S. economy when it announced the end of its monthly bond buying stimulus program.
