By Kenan Machado
Japanese equities climbed Thursday, leading stock markets in the region higher, after the Bank of Japan raised its economic growth forecasts while once again pushing back its inflation target.
At the end of its monthly policy meeting, the central bank raised its economic assessment for the country, saying it was “expanding moderately,” while it upgraded the growth projection for the year ending March 2018 to 1.8% from 1.6%.
Nonetheless, the BOJ now expects inflation to reach around 2% in the year ending March 2020, a year later than its previous projection. This is the sixth time it has had to postpone the target under Gov. Haruhiko Kuroda’s leadership.
“The BOJ’s target seems a long way off,” said Marcel Thieliant, a senior Japan economist at Capital Economics, but he said the good news was that the BOJ will likely have to maintain its ultra-easy monetary policy for an extended period.
The Nikkei Stock Average’s /zigman2/quotes/210597971/delayed JP:NIK -3.34% rose 0.6%, accelerating after rising about 0.2% in the morning. Early gains were driven by robust exports data in June, the seventh straight monthly gain, helped by steady demand overseas for semiconductors as well as a weaker yen.
More broadly, the focus in the market is turning to the European Central Bank’s monetary decision later in the day, for comments related to any policy tightening plans.
But a weaker U.S. dollar that has lifted the yen and euro could curtail the ECB’s ability to sound excessively hawkish, said Michael McCarthy, chief market strategist at CMC Markets.
“Their potential for jawboning is low,” he said.
Elsewhere in the region, Australia’s S&P/ASX 200 /zigman2/quotes/210598100/delayed AU:XJO -1.60% gained 0.5%, after data that showed the nation’s job market remained strong in June, with unemployment close to its lowest levels in four years.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.27% moved up 0.3%, while the Shanghai Composite Index /zigman2/quotes/210598127/delayed CN:SHCOMP -0.60% rose 0.4% as did Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 +1.18%
In Australia, gains were helped by a 8.3% surge in shares of oil and gas firm Santos /zigman2/quotes/207349564/delayed AU:STO -2.04% after the company raised its output guidance for the year and said it continued to make progress on cutting costs and debt.
Overnight gains in oil prices to a six-week high, thanks to a U.S. government report showing sharp drawdowns in oil and fuel stockpiles, also lifted energy-related stocks. Apart from Santos, Australia’s Oil Search /zigman2/quotes/204702973/delayed AU:OSH -2.28% gained 2.4%. In Japan, oil giants Inpex Corp. /zigman2/quotes/206689846/delayed JP:1605 -4.63% and Japan Petroleum /zigman2/quotes/201212147/delayed JP:1662 -5.82% rose more than 1.2% each.
In currency markets, the Australian dollar /zigman2/quotes/210561961/realtime/sampled USDAUD +0.1430% jumped to a fresh two-year high against the U.S. dollar following a strong June jobs report. Meanwhile, the Japanese yen /zigman2/quotes/210561789/realtime/sampled USDJPY -0.2095% hovered near session lows against the greenback after the BOJ announcement, on increased risk-taking appetite among investors.
Bucking the stock gains in the region, New Zealand’s NZX 50 index /zigman2/quotes/211587880/delayed NZ:NZ50GR -1.16% corrected 0.8% on profit-taking, after closing at another fresh record on Wednesday.
—Megumi Fujikawa, Yoko Kubota and Suryatapa Bhattacharya contributed to this article.