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Asian Stocks Gain Confidence as BOJ, China Cuts Rates

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The Asian stock market is experiencing a positive trend with each economy showing significant gains.

The Bank of Japan (BoJ) decided to continue its ultra-dovish interest rate, while China’s big banks announced rate cuts to stimulate capacity expansion and overall demand, fueling hopes of an end to the pessimistic outlook on economic performance.

Positive sentiment from the S&P500’s super bullish settlement on Thursday has also carried over to Asian economies.

Meanwhile, the oil market has stabilized above $70.00 after a V-shape recovery from $68.00, as investors expect monetary stimulus in China and a short-term pause in the policy-tightening spell by the Federal Reserve (Fed) to increase demand.

The International Economic Agency (IEA) reports that global oil demand is set to grow to a record 102.3 million bpd.

Yen Falls, Dollar Softens After BOJ Holds Interest Rates

Following the Bank of Japan’s announcement that it would maintain its ultra-low interest rates and predict that inflation would slow, the yen fell while nearing a 15-year low against the euro.

This news confirms BOJ’s unwavering dovish stance, which is in opposition to hawkish policies embraced by global peers.

Under its Yield Curve Control policy, BOJ is maintaining its -0.1% short-term interest rate target and a 10-year bond yield cap at 0%. Despite the decision-wise expectation, some participants speculated on the adjustment of the YCC, prompting stock prices to rise and yen to weaken.

Meanwhile, the dollar has weakened as a result of soft US data and the ECB’s announcement of an increase in borrowing costs.

The euro reached a one-month high, and sterling rose to a peak not seen in over a year, signalling a likelihood of the Bank of England raising interest rates for the 13th meeting consecutively.

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Author

  • Zahari Rangelov

    Zahari Rangelov is an experienced professional Forex trader and trading mentor with knowledge in technical and fundamental analysis, medium-term trading strategies, risk management and diversification. He has been involved in the foreign exchange markets since 2005, when he opened his first live account in 2007. Currently, Zahari is the Head of Sales & Business Development at TraderFactor's London branch. He provides lectures during webinars and seminars for traders on topics such as; Psychology of market participants’ moods, Investments & speculation with different financial instruments and Automated Expert Advisors & signal providers. Zahari’s success lies in his application of research-backed techniques and practices that have helped him become a successful forex trader, a mentor to many traders, and a respected authority figure within the trading community.