Asia set for higher open on BOJ surprise rate move

Asia set for higher open on BOJ surprise rate move

Asia markets are expected to extend gains on Monday, after the Bank of Japan (BOJ) surprise move into negative interest rates sent stocks higher on Friday from Tokyo to New York. Japanese futures traded higher, with Osaka Nikkei futures up by 0.79 per cent at 17,780.

Evan Lucas, market strategist at spreadbetter IG, wrote in a morning note that the BOJ's move was "a net positive for risk, net positive for international trade and increases in fund flows in Asia. All are seen as a macro positive."

Oil prices also extended gains last week on the back of reports that fanned hopes for a deal between OPEC and non-OPEC producers to cut production in the face global oversupply that has sent prices to near 12-year lows.

US crude futures ended last week with a 10.81 per cent gain, finishing at $33.62 a barrel. Globally traded Brent futures gained 13.90 per cent, closing at $34.74. Prices, however, remain low.

Energy plays traded mixed with shares of Santos down 0.63 per cent while Woodside Petroleum was up 0.21 per cent and Oil Search gained 0.92 per cent in early trade.

Australia's ASX 200 rose 1.07 per cent in early trsade, with the energy sector gaining 2 per cent and financials up by 0.86 per cent.

Banking shares were broadly up, with ANZ leading the pack, gaining 1.36 per cent.

Resources producers traded mixed with the likes of Rio Tinto and BHP Billiton gaining 2.10 and 0.72 per cent respectively. Fortescue was down 0.87 per cent.

The market will be watching the Reserve Bank of Australia's (RBA) February meeting on Tuesday, where experts expect the central bank to leave interest rates on hold at 2 per cent.

Shane Oliver, head of investment strategy and chief economist at AMP Capital, said a note on Friday, "December quarter inflation was low but in line with RBA expectations, recent Australian economic data has been okay and it's doubtful that the latest bout of financial and commodity market turmoil has been enough to move the RBA out of its "chilled out" state."

He added, "However, the latest round of worries about global growth coming at a time when domestic growth remains sluggish, national income is being hit by the continuing slump in commodity prices, the housing sector is losing momentum and inflation is low are likely to see the RBA strengthen its easing bias."

He added he expects the RBA to cut the cash rate again in the months ahead.

Stateside, major indexes finished higher on Friday. The Dow Jones industrial average rose 396.66 points, or 2.47 per cent, to 16,466.30.

The S&P 500 closed up 46.88 points, or 2.48 per cent, at 1,940.24, while the Nasdaq composite gained 107.28 points, or 2.38 per cent, to 4,613.95.

On the data front, a number of important economic indicators are due on Monday from China, South Korea, Indonesia, and Thailand. They include the Chinese official manufacturing and services PMI for January, South Korean trade data for January and consumer price indexes from Thailand and Indonesia.

Alicia Herrero, chief economist for Asia Pacific at Natixis, said in a note that China's manufacturing PMI data would continue to slow while services would hold up marginally.

"Services sector has surpassed manufacturing to contribute more than half of GDP growth in Q4 2015. The trend should continue in 2016," she wrote, adding, "The rise of middle-income class is supporting domestic consumption."

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