Yen firm after BoJ announcement, oil under pressure

Equity markets in Tokyo continued to fall on Monday after reacting to Friday’s statement from the Bank of Japan.

Japan’s Nikkei 225 lost 1.7 per cent. The average has now fallen nearly 4 per cent since the Bank of Japan tweaked monetary policy on Friday — an unexpected announcement that prompted confusion as traders weighed whether or not the action represented more stimulus.

The BoJ said it would start buying government bonds with longer to run until maturity, and would buy an additional Y300bn of equities a year. However, Haruhiko Kuroda, the BoJ governor, subsequently insisted that the changes were no more than a technicality. “These measures are not a response to downside risks for prices or the economy,” he said. “This is not additional easing.”

The yen, which perceived as a haven asset, was holding onto a 1.1 per cent gain from Friday, suggesting investors were not treating the move as further stimulus.

Commodities continued to weaken, unnerving the broader market. West Texas Intermediate, the US oil benchmark, fell as much as 1.2 per cent to $34.32 a barrel, a new low going back to February 2009. The price of Brent crude oil was down another 1.1 per cent to $36.47 per barrel, just above the seven-year lows seen last week.

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