Tokyo Stocks Soar On Central Bank Moves

TOKYO,(UrduPoint / Pakistan Point News -21st Sept,2016) - Tokyo stocks soared and bond yields recovered briefly Wednesday after the Bank of Japan overhauled its monetary policy in a renewed push to jumpstart inflation and get the economy back on track.

Bank shares were the big winners, as investors embraced news the BoJ would not push interest rates deeper into negative territory -- a policy that has hurt commercial lenders' profits. "It seems there's domestic political pressure for the BoJ not to hurt the banks' profits anymore," Khiem Do, the head of multi-asset strategy at Baring Asset Management in Hong Kong, told Bloomberg News.

Shaking off early losses, the benchmark Nikkei 225 index surged 1.91 percent, or 315.47 points, to 16,807.62 by the close. The broader Topix index of all first-section issues jumped 2.71 percent, or 35.70 points, to 1,352.67.

The BoJ said it would set a target for 10-year government bond yields, aiming to push them higher. The yield on Japan's benchmark 10-year government bond climbed into positive territory for the first time since March on the news before quickly sinking back.

It also loosened its annual asset-buying target -- a key feature of its more than three-year-old policy -- saying it could instead fluctuate to give it flexibility while focusing on keeping bond yields steady.

The bank pledged continue monetary easing as needed until it hits and stabilises inflation at its 2.0 percent target -- prices are nowhere near that level and doubts are growing about Tokyo's economy-boosting efforts.

"The fact that (the BoJ) pledged to keep the current policy until it achieves its 2.0 percent inflation target can be interpreted as expansion of easing policy," said Yasuhide Yajima, chief economist at NLI Research Institute.

Banking giant Mitsubishi UFJ Financial Group surged 7.35 percent to 553.3 yen, while rival Mizuho Financial Group powered 6.83 percent higher to 186.1 yen. Sumitomo Mitsui Financial Group jumped 7.33 percent to 3,689 yen.

Sony rose 1.60 percent to 3,373 Yen and Toyota jumped 3.23 percent to 6,114 yen but Nintendo dropped 1.17 percent to 26,995 yen. Government-controlled Japan Display sank 1.81 percent to 163 yen after a Japanese minister suggested in a media interview that Tokyo might consider divesting its stake unless the money-losing firm proves itself as more than a supplier of iPhone parts.

The Dollar soared to 102.71 yen from around 101.66 yen before the BoJ announcement. It quickly settled back around 102 yen.