Asian stock market gains on the back of a rally in Tokyo boosted emerging equities half a per cent on Wednesday as investors digested the Bank of Japan’s latest policy moves and waited for the U.S. Fed to conclude its meeting.
The Bank of Japan pledge for “yield curve control” via more purchases of longer-dated bonds weakened the yen and prompted a rise in 10-year yields to above zero for the first time since March. That in turn has pushed German and U.S. yields higher, a potential negative for emerging assets.
But Asian stocks tracked their Japanese counterparts higher, with Hong Kong, Seoul and Taipei markets all rising more than half a per cent and boosting MSCI’s emerging equity index to a new one-and-half week high.
Average dollar bond yield spreads over Treasuries tightened two basis points to 10-day lows of 339 bps.
But currencies across Asia fell against the dollar in line with the yen, with some jitters before a U.S. Federal Reserve announcement later in the day, which could give signals on the timing of the bank’s next rate rise.