TOKYO – The Tokyo Stock Exchange has managed to close slightly up a day of violent swings, including the disappointment of many investors for the modest monetary easing decided by the central bank: the Nikkei index closed up 0.56% to 16,569.25 points, after having fallen to 16,174 immediately after the Bank of Japan (BoJ) has just announced an increase in purchases of Exchange-Traded Funds (ETFs), to an annual rate which rose from 3,300 to 6 trillion yen. The banks’ securities have driven back in the final list, as the BoJ did not bring the key interest rates further in negative territory (compared to -01% in February introduced), which – if implemented, as some feared – would have penalized banking sector. The institute led by Haruhiko Kuroda has also increased its purchases of government bonds, nor even introduced forms of “helicopter money”.
The BoJ also announced that it will strengthen the programs to make it easier for financial institutions to obtain dollars. He also confirmed his assessment that the Japanese economy remains on a moderate recovery trend, while inflation estimates for the fiscal years 2017 and 2018 are “roughly” unchanged from the initial forecasts. However, for the current year (to March 2017) the inflation projections have been reduced from + 0.5% to a lowly 0.1%. The central bank also recognizes that the timing to achieve its inflation target of 2% – indicated during the fiscal year 2017 – is subject to considerable uncertainty mainly due to international risk factors.
in recent days had intensified pressures – political and market – on the central bank ’cause with new measures of monetary easing would maximize the effect of the maneuver of fiscal stimulus to the economy – for a total valrer estimated at 28 thousand billion yen – that Prime Minister Shinzo Abe has announced in recent days. In fact, in today’s press release it emphasizes the BoJ to consider that “these monetary policy measures and the government’s efforts will produce synergistic effects on the economy.” Two members of the Board dissented, believing one has over the near-doubling of shopping ETFs: stated that it ‘doing the BoJ is exposed to the charge of stock market manipulation.
The stock market had positioned this morning on a slightly negative tone in anticipation of the BoJ’s decision, in the presence of a slight rise in the yen, with movements of certain individual titles from the communications of the quarterly financial statements or extraordinary operations: for example, with rises for Nomura after returning to ‘ quarterly profit and a share buyback, or Sony after news of an upcoming sale to Murata of the battery business.
Inflation and declining consumption – Today was also announced that prices at the “core” consumer Japan fell at the fastest pace since 2013, a decline of 0.5% in June compared with a year earlier representing the fourth consecutive month of contraction. Excluding not only fresh food but energy prices, the index shows a modest rise of 0.4%. For the Tokyo metropolitan area, which usually anticipates the national trend, it is reported that in July, the “core” prices were down by 0.4 percent. The declared objective of the central bank of a sustainable inflation at 2% seems increasingly distant.
Moreover, more and today it was announced that the total household spending in June fell by 2.2% from a year earlier, a worse performance of the average expectations of a decline limited to 0.3 %: in this case is the fourth consecutive month of decline, perhaps tied to a “sentiment” depressed by the news on the fall in the stock market and the rise of the yen.
Unemployment minimum – the labor market is still live: unemployment and ‘dropped to 3.1% compared to 3.2% in May, with a 137 job offers for every 100 requests representing the best value from ‘August 1991. industrial production is up 1.9% from the previous month (more than expected). Overall, the latest indicators signaled that the maneuver of fiscal stimulus to the economy coming from the Japanese government should focus on supporting consumption. But the “highlight” of the package – which should be formally announced next week in its lines – seems to be going in the direction of a privileged promotion of infrastructure investment.
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