TOKYO: The yen jumped the most in eight months and Asian stocks erased gains after the Bank of Japan unexpectedly refrained from adding to record stimulus. Crude oil held above $45 a barrel after the Federal Reserve reiterated that U.S. interest-rate increases will be gradual.
Japan’s currency jumped 2 percent versus the dollar as of 12:21 p.m. Tokyo time and futures on the Standard & Poor’s 500 Index dropped 0.6 percent. The MSCI Asia Pacific excluding Japan Index was little changed, after rallying as much as 0.6 percent. Tokyo shares will react once afternoon trading starts at 12:30 p.m.
“It’s a total shock,” said Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $120 billion. “From currencies to equities to everything — you can see the reaction in the markets. I can’t believe this. It’s very disappointing.”
Australia’s bonds rose, buoyed by Wednesday’s gains in U.S. Treasuries after the Fed’s policy meeting. The Kiwi appreciated 1.1 percent versus the greenback after its central bank held off from lowering borrowing costs. Crude traded near a five-month high after data showed U.S. output slid to an 18-month low.
Fed Funds futures show the U.S. central bank’s comments did little to shift expectations on the likely timing of rate increases, defying predictions by some analysts that a tightening would be signaled for June or July. A resurgent oil price also supported investor sentiment, with the drop in American crude supplies soothing concern over a global glut, as did a flurry of earnings from companies including Facebook Inc. that beat analysts’ estimates. Twenty-three of 41 economists surveyed by Bloomberg forecast the BOJ would loosen monetary policy on Thursday, while 18 saw no change.
