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Asia Markets

Sept. 19, 2017, 6:49 a.m. EDT

Nikkei surges to 2-year high, but other Asian markets sag

Bank of Japan meeting on deck this week

By Kenan Machado


Reuters
Investors are looking forward to the Bank of Japan’s meeting later this week.

Action was mostly muted across Asia Tuesday ahead of central-bank meetings in the U.S. and Japan — with the notable exception of Japan, where stocks surged after a holiday Monday.

Elsewhere, commodities, currencies and a number of Asian stock indexes were moving back and forth across Monday’s settlement levels, failing to find direction. Market participants seemed unwilling to move boldly before the central bankers’ next policy statements.

Rate changes aren’t expected in either case, though the Federal Reserve is expected to detail plans for trimming its mammoth balance sheet.

After opening slightly higher, a number of Asian stock indexes turned fractionally lower as Tuesday morning progressed. Andrew Bresler, deputy head of sales trading for Asia-Pacific at Saxo Capital, highlighted not just pre-Fed positioning but “a bit of profit-taking” after the rebound seen since the start of last week.

But Japanese stocks wasted no time matching the broad stock gains seen in other Asian markets Monday. Opening above 20,000, a level not seen in six weeks, the benchmark Nikkei index (NIKKEI:JP:NIK)  closed up 1.96% at 20,299.38, the best finish since Aug. 15, 2015.

Helping stoke the gains was a further decline Monday in the yen (XTUP:USDJPY)  , extending the weakness that last week helped the Nikkei recover from four-month lows. The weak yen pushed export-reliant stocks higher still; insurance stocks, meanwhile, benefited from a continued rise in bond yields as risk appetite continued to improve.

Dai-ichi Life Holdings (TKS:JP:8750)  rose 3.7% and T&D Holdings (TKS:JP:8795)   picked up 3%, while game maker Nintendo (TKS:JP:7974)  jumped 7.1%, hitting fresh nine-year highs.

Risk appetites have done another 180-degree turn since the start of last week as worries about things like North Korea and U.S. hurricanes have faded. AxiTrader’s Greg McKenna added that investors have turned optimistic about U.S. President Donald Trump’s reaching across the aisle in pursuit of policy progress.

“There has been an absolute change in the narrative,” he added.

In Hong Kong, the Hang Seng Index (HONG:HK:HSI)  fell 0.4%. The Shanghai Composite (SHG:CN:SHCOMP)  slipped 0.2% and Australia’s S&P/ASX 200 (S&P:AU:XJO)   ended 0.1% lower.

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