Yahoo Finance Nikkei Strengthens as U.S.-Japan Trade Talks Commence
The major Asia/Pacific stock indexes were trading higher on Tuesday, bucking the trend on Wall Street on Monday, which featured a sea of red. Optimism over a U.S.-China trade deal continued to underpin the indexes, but most of the gains were fueled by favorable performances in several key local stocks and sectors.
At 05:02 GMT, Japan’s Nikkei 225 Index is trading 22227.47, up 55.44 or +0.25 percent. In Hong Kong, the Hang Seng Index is at 29999.07, up 188.35 or +0.63 percent and South Korea’s KOSPI Index is trading 2243.52, up 0.64 or +0.03 percent.
In China, the Shanghai Index is at 3213.06, up 35.27 or 1.11 percent and in Australia, the S&P/ASX 200 is trading 6273.90, up 22.50 or 0.36 percent.
BOJ’s Kuroda Vows to be Patient
In Japan, stocks may have been supported by the start of trade talks with the United States. Earlier in the day, Bank of Japan Governor Haruhiko Kuroda said, “some sort of protectionism” around global trade was the “most serious risk involved in the global economy.”
Furthermore, on Tuesday, Kuroda vowed to “patiently continue” the central bank’s “powerful” monetary easing as it was taking longer than previously thought to accelerate inflation to its 2 percent target.
“Prices remain weak despite a tight labor market, but the momentum toward 2 percent inflation is intact,” Kuroda told lawmakers in parliament.
Kuroda also urged regional banks to step up efforts to reduce costs and extend tie-ups after saying that while continuing its massive monetary stimulus, the BOJ will examine whether the decline in profits at regional banks may undermine financial intermediation.
Kuroda also told CNBC that there is room for reducing long-term and short-term interest rates.
“I think there (is) still some room for further monetary easing if needed,” he said, adding that it isn’t necessary at this stage.
The BOJ chief also added that the Japanese economy has “slowed down”, partly because Japan’s exports to China have become “somewhat” weak.
Aussie Dollar Pressured by RBA Rate Cut Discussion
There was also central bank activity in the Pacific region early Tuesday. The Australian Dollar was pressured after the release of minutes from the Reserve Bank of Australia’s April monetary policy meeting (RBA), which were construed by traders as dovish.
In the meeting minutes, the RBA said an interest rate cut would “likely be appropriate” in the event that “inflation did not move any higher and unemployment trended up.”
This article was originally posted on FX Empire
